, and to investments that exposed us to changes in liquidity premiums. the fund currently has extensive holdings of bonds, that despite high ratings, are difficult to trade in today ’ s market. realised losses have been limited. the flipside of large book losses is that this portfolio has a high yield, reflecting not only the increase in credit risk but also high liquidity premiums and fears and uncertainty in the market. history has seen a number of deep financial crises, and market conditions will return to normal in time. the true value of the bond portfolio will, at the very latest, be realised when the loans are repaid. more than 90 percent of the fixed income portfolio is rated a or better. even though rating agencies do not always prove to have the best evaluations, this still illustrates our conservative investment strategy. the fund is a long - term savings plan and capable of riding out large swings in the markets. this is the very foundation of the investment strategy with its high allocation to equities. our ability to adhere to this strategy in a critical phase – even if this should persist for some time – is crucial if the fund is to deliver the returns we expect in the longer term. we need to attach importance to the real value of equity investments and safeguard assets by spreading the fund ’ s investments. norges bank therefore supports the strategy that the government has chosen for the fund. under the fund ’ s strategy, more equities will be bought when equity prices fall and fewer when they rise. the fund therefore purchased a large volume of equities from 2001 to 2003 and is buying a considerable volume now. of the equities now owned by the fund, 40 per cent were purchased last year when prices were moving down. as a result, ownership in the business sector in the us, europe and asia has increased – in companies ’ human capital, in their machinery and equipment, brands and organisation. the fund now has holdings in almost 8000 companies and owns approximately 0. 77 per cent of global equity markets. in the long run, and even though many companies have now folded, investing in companies may perhaps be at least as safe as extending loans. thank you for your attention.

a higher rise in prices for domestically produced goods and services. a tighter labour market will probably lead to higher wage growth in the coming years. there are also signs that productivity growth, which has been strong, will slow now, which must be expected when the cyclical upturn has lasted for a long period. driving forces ahead the level of activity in the world economy is high. global growth from 2004 to 2006 was the strongest recorded since the early 1970s. continued solid growth among our trading partners is in prospect, and short - term interest rates are expected to rise in sweden, denmark, the uk and the euro area. after expanding at a strong pace over several years, the us economy is now showing signs of a slowdown. nevertheless, growth in the world economy is expected to remain firm. at the same time, the risk of an impending slowdown in global growth has increased. there are considerable uncertainties associated with the effect of a possible economic slowdown in the us on the global economy. signs of slower growth in the us are emerging primarily in the housing market. historically, developments in the housing market have been closely related to the general pace of economic growth. weaker developments in the housing market are expected to influence growth through a number of channels. lower house sales will curb housing investment, which accounts for a good 5 per cent of gdp. residential construction has been important for employment in recent years. the turnover time has risen markedly and prices and housing starts have fallen. high energy prices have so far pushed up inflation among our trading partners. in the us, general cost inflation has also been rising. in other countries, energy prices have only been passed on to a limited extent to other prices so that core inflation is still moderate and stable. the fall in oil prices through the autumn may curb inflation in the period ahead. in isolation, lower energy prices might result in lower interest rates than otherwise and contribute more directly to growth in total demand in many countries. the price fall is related primarily to reduced uncertainty about the supply of oil. a number of the risk factors that pushed up oil prices this summer, such as the conflict in the middle east and reduced production in nigeria and the us, have been reduced. in addition, global oil stocks are high and opec has announced that they will reduce production, which will increase spare production capacity correspondingly. the fall in prices is also due in part to lower demand and increased supply of alternative energy sources following several years of high oil prices. in addition,