underway to enhance our contingency plans to address failures external to the federal reserve. we are conducting a second round of supervisory reviews of banks subject to our supervisory authority and also actively coordinating with various domestic and international year 2000 organizations. this morning i would like to discuss these achievements and the important aspects of the job that remain ahead of us. federal reserve readiness the federal reserve has completed the renovation of its mission - critical systems, and we are nearing the conclusion of our internal year 2000 testing efforts. internal testing includes both individual applications and application interfaces, such as the exchange of data between fedwire and our integrated accounting system. testing is conducted through a combination of two elements : one is future - dating our computer systems to verify the readiness of our information technology, and the other is testing critical future date processing within our business applications. communications network components are also being tested and certified in special test lab environments at the federal reserve automation services and the board of governors. the reserve banks and the board have implemented test century date change ( cdc ) local area networks to verify the readiness of vendor provided products and internal applications that operate in network - based computing environments. with the exception of a few systems that will be replaced by march 1999, we will complete the testing activities and implement our mission - critical applications in production by year - end 1998. on june 29, 1998, we made our future - dated test environment available to customers for year 2000 testing ; the crucial testing period will extend through 1999. depository institutions which are federal reserve customers, and thus rely on our payment applications such as fedwire, fed ach, and check processing systems, can test century rollover and leap year transactions six days a week. on six weekends this fall, depository institutions will be able to test year 2000 test dates with several applications simultaneously. we are providing assistance to our customers who test with us, and have provided them, through a series of century date change bulletins, with technical information and guidelines concerning the testing activity. by the end of august, almost 400 customers, including the us treasury, had conducted cdc testing with the federal reserve, and the number scheduling tests is increasing rapidly. these tests encompass ten of our mission - critical applications. to ensure that the nation ’ s larger banks are taking advantage of this testing opportunity, we intend to contact any that have not availed themselves of this service. several foreign banking organizations have begun to test large dollar payment systems with the federal reserve and chips. most large foreign banks will

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