next year, while in general a stable rise in prices is expected in other industries. profitability is increasing, particularly in manufacturing for the domestic market, the construction sector and service industries. developments in employment show a mixed picture. manufacturing employment is rising at a solid pace, while the level of employment is stable in the other sectors. growth in the global economy will have an impact on developments in the norwegian economy in the period ahead. global growth is expected to moderate somewhat this year and stabilise in the years ahead. in the us, growth seems to have remained solid in the first quarter. heightened uncertainty with regard to developments in the us economy and weaker results for some large companies have resulted in falling prices on world stock exchanges. developments are weaker in the euro area – unemployment remains high and consumer confidence has fallen. in japan, it appears that growth will be positive from the fourth quarter of 2004 to the first quarter of 2005. growth in asia, except japan, and in central and eastern europe is expected to moderate but to remain strong. the outlook for growth in different regions indicates that the imbalances in the global economy, with large deficits in the us and large surpluses in some other countries, will persist. low growth in the euro area and japan is weakening the prospect of a gradual correction. this increases the risk associated with these imbalances. increased imbalances in addition to high oil prices and volatile oil markets are contributing to the uncertainty surrounding developments in the global economy. there are particularly large imbalances in the us balance of trade and current account. this partly reflects the us federal budget deficit. moreover, us households have a high level of consumption and a low level of saving. strong demand in the us has sustained growth in the world economy. the deficit in the us is matched by surpluses in europe and asia. a persistent deficit has pushed up us foreign debt to a high level. the us population is growing faster than that of other oecd countries. this may suggest that saving in the us is somewhat lower and investment somewhat higher than in other countries, but the impact is now considerably greater than implied by demographic factors alone. the imbalances may continue for a period. international capital markets are deep and liquid with an ample supply of credit for us borrowers. if creditors begin to fear a fall in asset prices and withdraw, this may still trigger substantial corrections. this may lead to higher interest rates and perhaps also a fall in us equity markets that spills

, it is our human resources that account for most of our national wealth. even a small increase in the “ return ” on human capital might generate considerable gains. the return on this capital partly depends on our pension schemes and the application of social security rules. these should be designed in such a way that they provide incentives and opportunities to work. labour market legislation must also promote production and employment. the storting ( norwegian parliament ) is currently in the process of completing its deliberations on the pension commission ’ s proposals for reforming the national insurance system. if we succeed in reducing the dependency ratio through a modernised national insurance system and other reforms, this will be an important contribution to addressing the fiscal challenges we are facing.