. 75 per cent. minor changes in outlook for economic activity so far, international developments have been largely in line with our assessments from the summer. the expansionary policy now appears to be taking effect in certain areas, particularly the united states, where signs of a recovery are becoming more apparent and the risks of a setback appear more slight. the asian economies are also developing relatively strongly. on the other hand, the prospects for the euro area still appear to be gloomy. in time, the expected upturn in the united states is expected to support a gradual upturn in europe. all in all, the riksbank's assessment is that gdp growth in the oecd area will be 1. 9 per cent this year, 2. 8 per cent in 2004 and 2. 6 per cent in 2005. neither has the riksbank's outlook for the swedish economy changed very much over the summer. however, new statistics indicate slightly stronger growth during the first half of this year compared with june. this means that the outlook for the swedish economy now appears somewhat brighter than at that time. the repo rate cuts totalling 0. 75 percentage points have also contributed to this. however, compared with august when we had our last executive board monetary policy meeting, we have not changed our assessment markedly. the riksbank's assessment is now that continued stable growth in incomes, wealth and employment will contribute to smooth and relatively robust growth in household consumption. during 2004 and 2005 an increase in investment is also expected, although there are no signs of a turnaround yet. some upturn in exports is now expected to occur in much the same way as usually happens during economic upturns. however, as a similar upturn is expected in imports, the net export contribution to gdp growth will be limited. public consumption is expected to grow by approximately 1 per cent per year over the coming years. the improved economic activity will lead to slightly higher resource utilisation than forecast in the june inflation report, which in turn means that wages in the private sector are expected to rise at a marginally higher rate during 2004 and 2005. as a result, domestic cost pressure will also be slightly higher during these years. on average, total wage costs are expected to rise by just under 4 per cent per year during 2004 - 2005. inflation in line with target inflation has fallen back slightly in recent months, although less than expected. this is because energy prices have not fallen as forecast. however, when

. another risk stems from a continued weakening of the dollar, although this may be motivated to the extent that it contributes to easing the adjustment to smaller deficits in the united states'budget and current account. the problem is that there is a risk of negative effects on exports, production and employment in the euro area and also sweden. adjustment problems and the effects on activity in the world economy could prove problematic if the dollar continues to depreciate at a rapid rate. however, there are also factors indicating that inflation could be higher than in the main scenario. the impending wage bargaining rounds comprise one risk. the riksbank's current assessment is based on the assumption that a weaker labour market will hold back the rate of wage increases. however, there are examples of wage bargaining rounds where wage formation has got out of control despite a low demand situation, for instance, in 1995. the conflict concerning the municipal workers'union is evidence of tensions in the labour market, which could have the effect of pushing up wage costs. no single factor is as central to inflation trends - and thereby to monetary policy - as wages. the riksbank will therefore follow the development of the wage negotiations closely during the autumn. another risk stems from energy price trends and in particular developments in electricity prices. the monetary policy stance so far has been based on the energy price rise being of a transient nature. we have refrained from changing the repo rate when energy prices have risen, although they have meant that inflation, and the forecast of inflation two years ahead, have periodically deviated from the 2 percent target. if energy prices remain at a high level over a longer period or continue to increase, the inflation rate could be higher than we have assumed. the conclusions for monetary policy would be different if this development begins to leave a mark on inflation expectations. all in all, the risks of lower inflation stemming from weaker economic activity are judged to be approximately balanced by the risks of higher inflation stemming from wage and energy price developments. the balance of risks therefore does not change the forecast i have reported earlier. it indicates that the underlying, cyclically - related inflation rate will be in line with the inflation target at the end of the forecast period. the executive board of the riksbank therefore found it natural to leave the repo rate unchanged. the future stance of monetary policy will depend as usual on the new information received and on how this affects the overall assessment of inflation prospects in the coming years. long - term growth prospects