a tightening in credit conditions ( in response to threats of a real estate bubble ), a return to a more sustainable pace of public investment, and weaker external demand in advanced economies due to their slowdown. china ’ s surplus, for instance, fell to 2. 8 % of gdp in 2011 from more than 5 % in 2010. china ’ s growth in q2 of 2012 fell to a three - year low of 7. 6 per cent, down from 8. 1 per cent in q1. china ’ s economy continues to weaken, with the industrial sector growing by just over 9 per cent in july, the lowest in three years. india ’ s activity suffered from waning business confidence amid slow approvals for new projects and sluggish structural reforms and policy environment designed to rein in inflation. brazil ’ s economy, in the first quarter of 2012, grew at its slowest pace ( at 0. 2 per cent q - o - q ) in more than two years. brazil has been hit by falling commodity prices and capital outflows, and central and eastern europe, by weak demand in the eu and retrenchment by euro area banks. 17. many of the larger and faster growing edes are close to, or above, potential, which suggests that they will not be able to drive global growth as before. a perceptible shift in the growth strategy of some edes in favour of increase in domestic consumption and demand, entailed significant rise in wage levels which is adding to inflationary tendencies. the scope for policy maneuverability in the edes at present seems to be limited as compared to 2008 – 09. while during the time of global financial crisis, the domestic factors in edes were supportive which encouraged them to put in place monetary and fiscal stimulus measures, the domestic environment in most of the edes during the eurozone crisis is not conducive either because of rising inflation or fiscal tightness or widening current account deficits or combination of all, broadly reflecting the legacy of global financial crisis. coming to the specifics, the edes ’ capacity to provide monetary stimulus is constrained by rising inflationary expectations, and their ability to announce any aggressive fiscal stimulus is limited by the mounting gross public debt. for example, in the depths of the 2008 credit crunch, china made 4 trillion yuan ( us $ 586 billion ) fiscal injection over two years ; and surge in bank credit by 17. 6 trillion yuan helped prop up the global economy.

policy in recent years, the krone would have been weaker. experience has also shown that the krone weakens when oil prices fall or, as we saw this summer, financial markets experience turbulence. chart 7 : inflation will slow and unemployment edge up 2 / 3 bis - central bankers'speeches with the current policy rate path, inflation is projected to move down further and approach 2 percent towards the end of 2027. unemployment will likely edge up to about the level prevailing before the pandemic. many people have experienced tighter household budgets in recent years, but most people will find that their budgets will stretch further going forward. interest expenses will still be high, but we expect wages to rise faster than prices, and the debt burden will be easier to bear. the economy may evolve differently than we now anticipate. if the outlook suggests that inflation will return to target faster or there is a more pronounced slowdown in the norwegian economy, the policy rate may be lowered faster than currently envisaged. on the other hand, if the krone depreciates further or economic pressures increase, inflation could remain elevated for longer. a higher policy rate than currently envisaged may then be required. inflation has slowed sharply. that's welcome news, and now it's important that we go the last mile of returning inflation back to the target. by maintaining confidence in the inflation target, we are better equipped to deal with new shocks and periods of turbulence in the future. 3 / 3 bis - central bankers'speeches