limited. in the aftermath of the terrorist attack on 11 september last year, the aviation and travel industries reported job cuts. cutbacks have also been announced in the process industry. the guidelines for fiscal policy will stimulate activity because petroleum revenues will now be phased into the economy. according to the government ’ s estimate, the guidelines imply an average increase in the use of petroleum revenues in the central government budget of about 0. 4 per cent of mainland gdp each year from 2002 to 2010. the government budget that was approved for 2002 implies that the use of petroleum revenues will increase by 0. 6 per cent of mainland gdp from 2001 to 2002. the guidelines for fiscal policy imply a substantial stimulus each year. the expansionary impetus varies considerably, and is greatest in the first few years. however, an unpredictable and more expansionary fiscal policy than that implied by the guidelines would have resulted in greater uncertainty. the guidelines provide a stable framework that contributes to reducing some of the uncertainty. over time, the size of the internationally exposed sector will be affected by the portion of petroleum revenues that is absorbed by the norwegian economy but will be unaffected by monetary policy. any appreciation of the krone may, nevertheless, affect the speed at which changes occur in the business sector. to maintain a balance in the norwegian economy, the phasing in of petroleum revenues must be countered by a monetary policy stance that is tighter than it would otherwise have been. this may be accomplished through a higher interest rate, an appreciation of the krone, or both. on balance, we expect moderate growth in the mainland economy in the next two years. the projections for gdp growth that were presented in the october 2001 inflation report were approximately on a par with the growth potential of the economy. household consumption and public spending are the main forces underpinning growth. fixed investment and exports are restraining growth. brisk growth in consumption is resulting in high demand for labour in public and private services. low international growth and lower petroleum investment are curbing employment growth. a tight labour market is generating continued high growth in labour costs. an expansionary fiscal policy, growth in private consumption and a continued high rise in labour costs contribute to a high rise in prices for domestically produced goods and services. at the same time, we expect a temporary decline in prices for imported consumer goods. this reflects lower international commodity and producer prices, a slower increase in global consumer prices and a stronger krone exchange rate. as these effects wane, and if global economic growth picks up in

rate will be increased. if it appears that inflation will be lower than 2½ per cent with unchanged interest rates, the interest rate will be reduced. inflation in norway is determined by both domestic and international inflationary impulses. domestic inflationary impulses are influenced by the state of the norwegian economy. international inflationary impulses are generated via prices for imported consumer and intermediate goods. these inflationary impulses will be influenced by developments in international commodity and consumer prices and by the exchange rate. the inflation target provides the framework for monetary policy. norges bank ’ s executive board makes decisions about changes in the interest rate. the members of the executive board are collectively responsible for the bank ’ s decisions. the executive board meets every three weeks. at every second meeting, the executive board discusses monetary policy in depth. decisions regarding changes in the interest rate will normally be made at these monetary policy meetings. three times a year, norges bank prepares inflation reports in which it presents its projections for inflation and economic developments in the years ahead. the executive board discusses the economic outlook at a separate meeting three weeks before the inflation report is presented. on the basis of preliminary projections for the report, the executive board assesses the outlook for inflation two years ahead and the uncertainty surrounding these projections. the following day, the executive board summarises its discussions and assesses the consequences for monetary policy for the next four months. this assessment constitutes an important internal reference when the executive board later makes a decision regarding the interest rate. it will also provide the basis for our external communication through speeches and the media. the risk of a deep recession in the world economy appears to have diminished. there is still, however, considerable uncertainty surrounding both the timing and the strength of the recovery. last year industrial output declined markedly in all major regions of the world economy. in the us it appears that the decline may be coming to a halt. developments in japan are still highly uncertain. in the us, confidence indicators have recently shown some signs of improvement. the decline recorded following the terrorist acttacks on 11 september last year has been partly reversed. nor does it appear that households in the euro area have become more pessimistic in the last few months. however, the indicators suggest that they still consider the economic situation to be fairly negative. various institutions ’ growth forecasts for 2002 were lowered substantially through 2001. due to sluggish economic developments, many central banks reduced their key rates last year, in some cases quite appre