normally lags behind the development of gdp. in turn, this will restrain price and wage developments abroad for the next few years. i will return to this issue later on. there is also considerable uncertainty about the strength of the recovery. the upturn in the period immediately ahead will partly be driven by temporary factors such as the effects of highly expansionary fiscal and monetary policies and an inventory cycle. there is therefore a risk that growth will be dampened again when the stimulating effect of these temporary factors declines. experiences from previous financial crises, as reported by reinhart and rogoff, the international monetary fund ( imf ) and others, also indicate that the recovery following a financial crisis will be drawn out. 1 the differences between various forecasters ’ views of future gdp growth are now unusually wide. this can be illustrated by the range of their gdp forecasts ( figure 6 ). asia, however, is a part of the world experiencing strong growth. china and india have also been impacted by the financial crisis, but to nowhere near the same extent as the more developed countries. gdp growth declined somewhat in asia in 2009, but was still high by western standards ( figure 7 ). it is first and foremost china ’ s increasing domestic demand and imports that are stimulating growth in the region. the oecd ’ s indicators also show that gdp in brazil and russia has bottomed out and is now on the way up. low resource utilisation is restraining international price and wage development even if the international recession ’ s lowest point has now been passed and the world economy is improving, price and wage developments are being restrained by low resource utilisation. inflation is unusually low in both the united states and the euro area. in the united see carmen m. reinhart & kenneth s. rogoff, 2009. “ the aftermath of financial crises ”, american economic review, american economic association, vol. 99 ( 2 ), pages 466 – 72, may. states, inflation measured as annual percentage change has been negative since last spring ( figure 8 ). in the euro area, inflation was negative during the summer and autumn of last year, but rose to 0. 6 per cent in november ( figure 9 ). underlying inflation has fallen in both geographical areas since the middle of 2008. one contributing cause of this low and, for a period, negative inflation is the weak development of the labour market. in the united states, employment levels have continued to decline during the autumn, with unemployment

impact on financial stability in that the riksbank's repo rate cuts have helped to push down market rates. however, the large gap remaining between the repo rate and market rates shows that monetary policy cannot resolve the financial crisis. but i would nevertheless like to emphasise that monetary policy fulfils an important complementary function in alleviating the effects of the financial crisis on the real economy. as i described earlier, the stimulating effect of the riksbank cutting the repo rate has been weakened as the normal link between the short - term market rates and the repo rate has been broken. this situation should gradually change as conditions in the financial markets normalise. when the inflation rate falls again, there will be good opportunities for monetary policy to dampen the economic downturn without jeopardising the riksbank ’ s inflation target. thank you!