##ksbank has raised the interest rate in a number of stages since january 2006 and that these increases have not yet had a full impact on the economy. what has happened since the monetary policy meeting? so far my assessment is that outcome data and indicators in the euro area are largely in line with the assessment in the main scenario of the monetary policy report. my opinion is also that the indications of weak us growth at the beginning of this year and the continued problems on the housing and property markets are in line with the assessment in the main scenario. in the short - term perspective the assessment does not differ from my own. i am however more concerned that it will take longer before the recovery gathers pace. swedish gdp growth during the fourth quarter last year was somewhat stronger than expected in the monetary policy report. employment, measured as the number of hours worked, increased at an unexpectedly high rate and productivity growth last year was weaker than expected in the report. the national institute of economic research ’ s business tendency survey for february shows a clear slowdown in economic activity in the business sector as a whole. the business tendency survey suggests that employment has continued to increase, but at a slower rate. companies have adjusted their recruitment plans downwards ahead of the coming months. in contrast, the purchasing managers index displays a more positive view in february. the total index rose somewhat and during several months fluctuated around the level of 55, which is close to the average since 2001. however, at the same time, the survey shows that growth in employment has slackened and that companies have become less optimistic about output growth in the future. in january inflation in sweden was somewhat lower compared with the forecast in the monetary policy report. however, this was largely connected with the fact that the weights in the cpi basket, as at the end of each year, had changed. the effects of this change were unusually large this time. this could be interpreted as though consumers, to a greater extent than normal, have replaced goods and services that increased rapidly in price in their consumption. the so - called substitution effect was then greater than the riksbank and most other analysts had assumed. all in all, activity in the swedish economy during the final quarter last year appears to have been slightly higher than we expected in february. productivity on the other hand showed weaker development than in the assessment in the report. survey data clearly suggests however that a slowdown is occurring in most parts of the business sector and that the increase in the demand for labour is on the

a larger percentage of this trade with eu countries, than many eu countries have themselves. the eu's trade with the 10 candidate countries is increasing more rapidly than that with any other geographical area in the world. during the period 1995 - 2000, i. e. in just five years, this trade has doubled. the percentage of intermediate goods ( components ) for western companies is growing, as is the percentage of goods with a high technology content. there are numerous examples of how eastern european companies are specialising to adapt to sophisticated co - operation with western european companies. hungary is now competing with ireland to attract the assembly of computers and cars, estonia is a large sub - contractor to both swedish clothing firms and to ericsson, nokia and their suppliers. st eastern europe may be europe's major opportunity at the beginning of the 21 century, after having trailed behind the usa in terms of growth at the end of the 1990s. the usa's increase in growth in the 1990s was partly due to the us economy being internationalised more rapidly than before, with a larger percentage of gdp exposed to international competition than the eu. if eastern europe is now integrated more closely with western europe, this could create a more efficient division of labour and raise productivity in western europe. the challenge of eu enlargement eastwards could rouse decision - makers in western europe to a more intensive reform effort so they can fully take advantage of what will, in total, be the world's single largest market. there are parallels here to japan's success story in the 1970s and 1980s, when japanese industry, which had not yet subsided into its own structural problems, benefited from the interplay with the dynamic asian economies that complemented the japanese companies. just as the dynamic asian economies additionally formed a bridge to china, the candidate countries comprise a bridge to russia ( particularly the st petersburg region where sweden is concerned ), the ukraine and the other cis countries – areas that should also become a growing part of the eu's trading sphere. moreover, unlike many dynamic asian economies, the candidate countries'populations have always had a very high level of education ; in science and technology it is fully comparable with the level in the current eu member countries. the east european trade is particularly important to the swedish economy, which is already one of the most open and trade - dependent economies in europe, at the same time as we have strong historical ties to several eastern european countries, particularly the three baltic states and poland. already, central and eastern europe