growth was solid last year. person - hours worked increased by 2. 2 % from 2003 to 2004. a corollary to the increase in the number of person - hours worked is partly reduced sickness absence and partly three more working days in 2004 compared with 2003. inflation has been low in recent years. initially, the fall in prices for imported consumer goods pushed down underlying inflation. after a period, the rise in prices for domestically produced goods and services also slowed. inflation measured by the cpi - ate reached its lowest level in the first months of 2004. inflation remained at less than ½ % until after the summer before picking up in the autumn. inflation moved up primarily as a result of a slower decline in prices for imported consumer goods. the depreciation of the krone since the beginning of 2003 has contributed to these developments. in addition, the rise in prices for domestically produced goods and services stabilised, and towards the end of 2004 there was a tendency towards a higher rise in prices for these goods and services. prices for imported consumer goods fell more than expected at the beginning of 2005, while the tendency towards a more rapid rise in prices for domestically produced goods and services has persisted. so far in 2005, inflation measured by the cpi - ate has been around ¾ per cent. the other nordic countries have also experienced falling inflation. inflation has declined, and is now relatively low in sweden, denmark, finland and norway. the year - on - year rate of underlying inflation in these countries was around 1 per cent in march. a common feature of the low level of inflation in the nordic countries seems to be the sluggish trend in prices for imported consumer goods, even though developments have not been entirely the same in all the nordic countries. reliable information about the economic situation is important when setting the interest rate. information from the regional network is a useful supplement when assessing the current economic situation. region south reports high growth in activity in all industries. the market outlook is positive and more broadly based than previously. growth in the export industry and the construction sector is expected to remain solid, although somewhat weaker than earlier. on the other hand, there is now more optimism in the retail trade and service sectors. capacity utilisation varies across industries. there is little excess capacity in the construction sector. skilled labour in particular is in short supply. there is some excess manufacturing capacity, while considerable excess capacity is reported in retail trade and services. the export industry is expecting a slower rise in prices for export products

the petroleum sector to record - high levels. the level of investment in this sector in 2014 was as high as total investment in domestic non - oil industries. the positive spillovers to the oil service industry and other business sectors have been substantial, in particular through the past decade. norwegian employment has remained high and unemployment low, even when the financial crisis hit in 2008. it is estimated that 1 out of 9 jobs in norway are linked to the oil industry. bis central bankers ’ speeches fiscal rule it was established at an early stage that norway ’ s oil and gas resources belong to the norwegian people. the tax system for the petroleum industry was designed to make sure that the bulk of the large revenues, the economic rent from the petroleum sector, would accrue to the state. petroleum companies pay a surtax of 51 percent of profits, on top of the normal corporate tax rate of 27 percent. the government also has direct ownership shares in the most profitable oil fields. however, policymakers ’ handling of norway ’ s newly discovered petroleum wealth got off to a rather bumpy start. during the first 25 years of oil production, norway experienced two deep recessions. both downturns were rooted in hugely optimistic income expectations. in the 1970s, the public sector was the big spender, and the government had to tighten policy later on. in the 1980s, a credit - fuelled consumption boom in the private sector led to necessary cut - backs after the oil price plunge in 1986. these two episodes of turbulence made clear how vulnerable a small open economy is to terms of trade disturbances, as well as to short - termism and exuberant expectations. to prevent the same mistakes from being made again, fiscal institutions were set up in the 1990s. among the most important of these are the oil fund and the fiscal rule. chart : the fund mechanism the norwegian parliament passed the act relating to the oil fund in 1990. under the act, the net fiscal surplus, including oil revenues, is transferred to the fund, and invested in international markets. a main purpose of the fund mechanism is to make the actual spending of oil revenues transparent. towards the end of the 1990s, inflows to the oil fund increased, and there were expectations of considerable petroleum revenues in the future. there was increasing political pressure to spend more. in a climate of high inflows and even higher expectations, it was demanding to restrain fiscal spending. at the same time, it was clear that future pension obligations would be substantial