interest rates ease repayment burdens, this may not last. the resilience from having sufficient buffers in place proved vital in responding to the pandemic and will be 2 / 3 bis central bankers'speeches paramount in dealing with future downturns. 1 i would like to thank daragh clancy and caroline mehigan for their contribution to my remarks. 2 see broner, f., d. clancy, a. erce & a. martin, “ fiscal multipliers and foreign holdings of public debt ”, review of economic studies, forthcoming. 3 indeed, irish income tax returns and earnings data point to an increase in aggregate employee earnings, driven by workers in the many sectors relatively unaffected by the restrictions. see also cahill, b. & r. lydon ( 2021 ), “ the impact of covid - 19 on the incomes and debt sustainability of irish households ”, economic letter, vol. 2021, no. 2, central bank of ireland. 4 for a detailed discussion, including references to some of the substantial amount of research produced by the central bank of ireland on this issue, see my speech at the national university of ireland, galway on 30 march 2021. 5 see conefrey, t., r. hickey & n. mcinerney ( 2021 ) “ covid - 19 and the public finances in ireland ”, economic letter, vol. 2021, no. 3, central bank of ireland. 6 see clancy, d., p. jacquinot & m. lozej ( 2016 ) “ government expenditure composition and fiscal policy spillovers in small open economies within a monetary union ”, journal of macroeconomics 48 : 305 – 326 and hickey, r., m. lozej & d. smyth ( 2020 ) “ financing government investment and its implications for public capital : a small open economy perspective ”, economic modelling 93 : 620 – 641. 7 see lydon, r. & t. mcindoe - calder ( 2021 ) “ saving during the pandemic : waiting out the storm? ”, economic letter, vol. 2021, no. 4, central bank of ireland. 8 see wosser, m., m. o ’ brien & c. mehigan ( 2019 ) “ financial stability considerations of being a small, highly globalised economy ” box 2, financial stability review 2019 : 1, central bank of ireland. 9 see o ’ grady, m., j

no longer a constraint on production. the enterprises in the network are expecting output and employment to fall further over the next six months. unemployment has increased since autumn last year, but is still at historical low levels. unemployment is projected to rise to 4 3 / 4 per cent at the end of the year. wage growth is expected to come down this year from a high level in 2008. lower corporate profitability, rising unemployment and lower consumer price inflation will probably result in low negotiated pay increases this year. the export sector has been particularly hard hit by the global downturn. traditional exports have fallen markedly since autumn last year. a contraction in the world economy will result in a substantial decline in norwegian exports ahead. moreover, due to the marked fall in commodity prices, export prices are now very low. expensive and reduced access to credit, high interest expenses and uncertainty about developments ahead amplified the downturn towards the end of 2008. private consumption fell markedly, the decline in housing investment accelerated and mainland business investment started to fall. the downturn in the world economy and the abnormal conditions in financial markets are expected to continue to mark the norwegian economy ahead. mainland gdp is projected to contract by 1 per cent between 2008 and 2009. norwegian government finances are sound with substantial net wealth, although the surplus will be reduced by the fall in oil prices. the automatic stabilisers in the national budget together with discretionary fiscal policy will stimulate the mainland economy by the equivalent of 5 per cent of gdp from 2008 to 2009. fiscal policy is assumed to become less expansionary between 2010 and 2012. government oil revenue spending is expected to be brought back into line with the fiscal rule when cyclical conditions eventually normalise. we assume that prospects for higher unemployment, a fall in house prices and a high level of debt will induce households to build up financial buffers and reduce debt. the saving ratio is expected to increase considerably. net lending is projected to be positive this year after being negative since 2004. as household borrowing has been considerable in recent years, deleveraging in the household sector is important to long - term stability in the economy. the outlook ahead, and monetary policy assessments in norway, inflation will be curbed by lower capacity utilisation. the marked increase in unemployment now envisaged will result in lower pay increases this year and next. prospects of weaker growth and lower inflation imply a lower interest rate than presented in the interest rate projection from our last forecast in december. there is also a risk that the global down