Consumer price inflation is estimated at 2¼ per cent, or slightly lower, in 1999. Price inflation is projected at 2 per cent in 2000 and 1¾ per cent in 2001. The projections for price inflation remain unchanged on the June Inflation Report.

Wage growth is expected to slow the next few years, and is estimated at 4¾ per cent in 1999 and 3¾ per cent in 2000 and 2001.

Norges Bank expects mainland GDP to expand by ½ per cent in 1999 and ¼ per cent next year. Growth is expected to pick up to 1½ per cent in 2001. The growth projections have been revised down for 1999 and revised up for 2001 compared with the previous Inflation Report.

The Inflation Report confirms that, after the sharp upturn recorded since 1992, the Norwegian economy is now experiencing a period of slower growth. At the same time, the risk of a serious recession in the Norwegian economy has been reduced since last winter. It appears that the downturn will be confined to certain sectors of the economy, in particular the construction sector and engineering industry.

Pressures in the labour market have resulted in a deterioration in the business sector's cost competitiveness. Particularly as a result of the income settlement in 1998, wage growth has been 11 per cent for the last two years combined. In conjunction with a projected fall in petroleum investment, this is having an adverse impact on the internationally exposed sector. Activity remains high in the sheltered sector, particularly in private services and in the local government sector.

The projections for unemployment have been revised down since the previous report. Unemployment is now estimated at 3¼ per cent in 1999, 3¾ per cent in 2000 and 4 per cent in 2001.