in norwegian labour costs has been around 5 - 6 per cent in recent years. this is 1½ - 2 percentage points higher than among our trading partners. the higher interest rate level in norway reflects this fact. at the moment, there is no clear indication of a marked slowdown in the norwegian economy. the price of oil remained high for a long time, despite the international downturn, but fell more than usd 3 yesterday, 24 september. the price of aluminium has fallen somewhat but is still high compared with the average price in recent years. the year - on - year increase in the export of metals, excluding iron and steel, was 0. 7 per cent in the second quarter of 2001. the price of fresh salmon remains at the same level as in the last half of the 1990s. exports of fish and fish products increased by 3. 9 per cent from the second quarter of 2000 to the second quarter of 2001. due to international developments, the uncertainties and the downside risks are now greater for many export industries. the krone has appreciated recently measured against our trading partners ( trade - weighted exchange rate index ). this partly reflects more than 20 per cent appreciation against the swedish krone since spring 2000. measured by the trade - weighted exchange rate index, the krone is now about 2 per cent weaker than in 1990 and on a par with the level in 1994 - 95. so far this year, the volume of traditional merchandise exports have increased more than in the same period last year, but growth is levelling off. the exposure of norwegian exports in the ict sector, where the international downturn has been most severe, is limited. norway ’ s manufacturing output has declined somewhat this year, but less than in other countries. on the other hand, norwegian manufacturing industry did not experience the upswing in 1999 and 2000. the business sentiment indicator does not suggest a severe decline. the order situation is still satisfactory in many industries. this does not necessarily mean that the turnaround will not occur in norway as well. a sharp fall in share prices, tighter borrowing terms and an imbalance in international credit markets may quickly affect investment, prices, profitability and expectations. so far, however, it is difficult to draw any conclusions except that uncertainty has increased. the norwegian economy is operating at capacity limits and there are few if any available resources in the labour market. unemployment has declined throughout the country. unemployment in western norway, which increased marginally last year, has returned to its previous level

. unemployment has risen slightly again in eastern norway. this reflects lower employment in private services that may be a result of a slight downturn in the ict industries and retail trade. the government ’ s long - term programme for 2002 - 2005, which was approved by the storting in june 2001, states : " considerable emphasis must be placed on stabilising fluctuations in the economy in order to ensure appropriate capacity utilisation and low unemployment. petroleum revenues will gradually be phased into the economy, approximately in step with the expected real return of the petroleum fund. " fiscal policy will contribute to stimulating activity in the economy because of the increase in spending of oil revenues. the new guidelines imply that the non - oil deficit will increase in the years ahead. this will provide a substantial fiscal stimulus every year. summary the tragic events in the us on 11 september will contribute to a further dampening of activity in the american, asian and european economies. it is too early to predict the long - term effects. reactions in financial markets have been pronounced. share prices have fallen sharply. the u. s. dollar has depreciated. currencies of other economies such as sweden have depreciated. central banks have ensured the smooth functioning of markets by supplying liquidity to the banking system. interest rates have been cut in the us, canada, the euro area, switzerland, sweden, hong kong, taiwan, denmark, japan, the uk, new zealand, korea and malaysia. these cuts will contribute to mitigating the negative effects on demand, output and employment. the norwegian economy is characterised by high capacity utilisation and strong cost inflation. the mainland economy appears to be expanding approximately in line with growth in output potential. at present, we do not have sufficient evidence to assert that international developments will change this situation. the announced increase in spending of petroleum revenues may lead to a more expansionary fiscal stance than in recent years. according to norges bank ’ s assessment, with an unchanged interest rate ahead, the probability that inflation two years ahead will be higher than 2½ per cent is the same as the probability that it will be lower.