The inflation projection for 1999 remains unchanged in relation to the March Inflation Report. The projections for 2000 and 2001 have been revised upwards by a quarter percentage point, reflecting a moderate upward adjustment of wage growth the next two years and slightly higher import prices.

The Inflation Report confirms that growth in the Norwegian economy is now slowing, with clear evidence of a contraction in business fixed investment, particularly in manufacturing and the petroleum sector. Investment is expected to continue to fall next year, and employment in manufacturing and the construction industry will decline. On the other hand, sectors that are not exposed to international competition continue to expand. Private consumption has exhibited vigorous growth, and there are signs of continued growth in the local government sector.

Norges Bank expects mainland GDP to increase by ¾ per cent in 1999 and ¼ per cent in 2000. Growth is estimated at 1¼ per cent in 2001. The growth projections are slightly higher for all three years compared with the March Inflation Report, but still substantially lower than the growth rates experienced in recent years.