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

economies. in addition, labor mobility in japan across firms and industries has been low, especially among regular workers who tend to stay at the same company or within the same industry throughout their careers. the gradual pace of change in the labor market may arise because how we work is closely related to other aspects of our way of life as well as social values and norms. i believe that the rapid socio - economic changes of recent years mentioned here at this summit will, however, bring a significant change to the japanese labor market over time. three challenges for japan's labor market it is my belief that labor markets should adapt to the changing economic environment in a flexible manner. in this sense, customs and institutions - - which have long structured japan's labor market - - must be transformed in order to boost our country's growth potential. although further discussion is needed on the nature of these transformations, today's summit has given us some insightful hints. from now on, i will refer to the three challenges for the labor market which i think are important. the first challenge is how our labor market will respond to further advances in technological innovation. it is often pointed out that recent technological innovations, namely in robots, ai, and big data, will encourage substitution between workers and machines. there are concerns that such substitution may extend into a broader range of fields than we have hitherto experienced - - even into fields previously believed to be " sacrosanct " and reserved exclusively for humans. however, history tells us that technological innovation generates economic prosperity in the long run. technological progress increases income and purchasing power, as well as demand for new goods and services ; furthermore, it creates new jobs. in this situation, we should ensure the smooth transition of labor to growing sectors with new jobs so as to reap the benefits of technological innovation. japan's labor market is, however, well known for its low labor mobility due to long - standing life - time employment practices. from now on, our labor market should embrace new practices that accommodate workers seeking transition from one job to another, with programs for re - training and a social safety net for the unemployed. the second challenge is how our labor market will change in the face of further globalization. since globalization often goes hand in hand with innovation, it will accelerate improvements in labor productivity. the next stage of globalization will entail both an increase in the number of japanese workers abroad and an influx of foreign workers coming to japan. indeed, government policy has