hence consumption growth. the difference in growth in credit to households and non - financial enterprises is a good illustration of norway ’ s dual economy. over the past few years, credit growth has been far higher for households than for enterprises. the level of household credit growth has remained high recently. an important reason is the sharp rise in house prices in recent years. low investment demand is reflected in credit to non - financial enterprises, which has declined to a very low level. developments in prices for commercial property compared with house prices also indicate that the situation is better for households. developments in mainland enterprises have been characterised by low output growth, falling investment and declining profitability in many industries. in order to boost returns on invested capital, enterprises have taken steps to reduce costs, primarily by reducing their workforce or relocating parts of their production abroad. by way of conclusion, i would like to present a summary of the economic outlook for the norwegian economy. growth in the norwegian economy is projected to pick up this year, primarily fuelled by higher private consumption. there are signs of high productivity growth, which means that companies can produce more with the same workforce. the high cost level in norway and strong competition will probably induce many industries to continue reducing costs and rationalising. against this background, the output potential of the norwegian economy is assumed to increase more than normal in 2004. as demand edges up, enterprises ’ profitability will improve. at the same time, they may meet capacity constraints. investment is therefore expected to pick up gradually and become a more important driving force behind the upturn. mainland gdp growth is projected to pick up markedly this year and remain relatively high in 2005 and 2006. thank you for your attention.

saved for future generations. • monetary policy is aimed at ensuring low and stable inflation. monetary policy the operational target of monetary policy as defined by the government is inflation of close to 2. 5 per cent over time. it is just as important to avoid an inflation rate that is too low as it is to avoid an inflation rate that is too high. the inflation target provides economic agents with an anchor for their decisions concerning saving, investment, budgets and wages. the inflation target also provides a framework for monetary policy ’ s contribution to stabilising output and employment. the economy grows thanks to increases in the supply of labour and capital and technological progress. average growth over time is referred to as trend growth. owing to shocks to the economy, actual growth fluctuates around trend growth. the chart shows actual mainland gdp growth and trend gdp growth. normally, norges bank sets the interest rate with a view to achieving inflation of 2½ per cent two years ahead. a two - year horizon is applied because it takes approximately two years for an interest rate change to have a full impact. a flexible exchange rate norway is a small open economy with a floating exchange rate. the norwegian krone does not stand out as particularly volatile. on the contrary, in countries like sweden, the uk, switzerland, australia, canada and new zealand, the exchange rate fluctuates just as much - or more - than the norwegian krone. there is a cost involved for businesses in hedging against fluctuations in the krone. a krone that is stable - but too strong - also entails costs in the form of low activity. similarly, a krone that is stable but weak - is a source of high inflation. petroleum revenues generally provide substantial, but uneven currency inflows into norway. the currency flows might have resulted in a strong krone and wide variations in the exchange rate. this tendency is countered when the annual use of petroleum revenues over the central government budget is predictable and independent of annual revenue inflows, and the remainder is invested abroad. the capital outflow through the petroleum fund contributes to both curbing the appreciation of the krone and maintaining its stability. norges bank has not defined an exchange rate target. nevertheless, developments in the krone are of considerable importance to interest - rate setting because exchange rate developments have an impact on inflation and output. although the krone may fluctuate in the short term, it will generally stabilise over time. when inflation has