considerable spillover effects on other sectors of the economy. unemployment would probably rise. we cannot eliminate that risk. curbing the exploitation of oil and gas resources is not a feasible alternative. the abiding question is how to limit the vulnerability associated with increased oil dependence. our main defence is to keep our own house in order. norway must be poised to resist shocks to its economy. the fiscal rule for petroleum revenue spending is one defence mechanism. the petroleum fund mechanism and moderate and predictable spending of petroleum revenues over the central government budget contributes to enhancing economic stability. reserves accumulated in the government pension fund global provide fiscal leeway in the event of an economic setback, as observed in 2008 and 2009. by limiting petroleum revenue spending to the expected real return on the fund, we ensure that our petroleum wealth will benefit future generations. a balanced approach to revenue spending will allow future generations to share in the wealth also through the part that is spent on public investments domestically. chart 11 : norwegian labour is expensive the spending of petroleum revenues also has another facet. it increases the cost of norwegian labour. during upturns norwegian companies have fared well, in spite of rapidly rising costs, thanks to efficiency gains and the rise in producer prices for their goods and services. some other countries in europe allowed costs to rise at broadly the same pace over a number of years. now that these countries are in a downturn with a high level of spare capacity, they are improving competitiveness. if the norwegian economy enters a downturn, the high level of costs in our country may become a hindrance in the competition for tenders and market shares. a floating exchange rate is a buffer against economic shocks. the experience of 1998 and 2008, for example, indicates that the krone will depreciate in the event of a sharp drop in oil prices. when inflation is firmly anchored, the rise in consumer prices will not accelerate even if the krone weakens. norges bank can then allow the krone to fall in value without having to implement a large degree of monetary policy tightening. this will dampen the downturn in the mainland economy, hence facilitating restructuring in the business sector. should the outlook for the petroleum industry show a significant shift, norway will have to start down the hard path of economic adjustment. what we need above all is a profitable and efficient business sector that can adapt to new times. in that respect, there are some aspects of the norwegian economy that give cause for reflection. chart 12

: mainland gdp – stable nominal growth on the surface, developments are positive. nominal mainland gdp growth at current prices has been almost surprisingly stable. over the past 20 years, nominal mainland gdp has increased by around 6 percent annually, and growth is still hovering around that trend. there were some tendencies towards overheating in the years prior to the financial crisis. price and cost inflation in the norwegian economy picked up markedly. but the correction that followed during and after the crisis has brought growth back to trend. there is little in this chart to indicate that the world economy has recently been through the most severe economic downturn in post - war history. bis central bankers ’ speeches the picture changes when growth is broken down into price and volume. the high prices for domestically produced goods are the main factor that has supported our country ’ s income. since 2005, producer prices have increased considerably faster than trend. this illustrates that mainland businesses have also benefited from the substantial improvement in norway ’ s terms of trade. chart 13 : mainland gdp – slump in economic activity economic activity, on the other hand, slumped during the financial crisis. although economic growth has picked up in the past few years, the level is still clearly below the pre - crisis trend. this would indicate that the financial crisis and the debt crisis have had lasting effects on the norwegian economy as well. chart 14 : mainland gdp – per capita the picture becomes even clearer when population growth is factored in. measured per capita, we do not generate more value today than we did five years ago. this picture is similar to that of other advanced economies. the break from the years prior to the financial crisis is clear. growth is being supported by immigration and employment growth, and not by increased productivity. there are two factors that determine value added in a population. one is labour input and the other is labour productivity. i will look at some aspects of each of these factors. chart 15 : employment ratio is high, but hours worked are low the employment ratio is high in norway. labour force participation is high and most jobseekers find work. employment has increased rapidly since the mid - 1990s. an expansionary monetary policy and additional government expenditure of oil money buoyed activity and employment through the financial crisis. measured by hours worked, labour input has also risen, albeit not to the same extent. on average, the working day is shrinking. the employment ratio adjusted for working hours provides an expression of average labour input per hour worked among the active population. in this