Consumer price inflation is projected at 2¼ per cent in 1999 and 2000, and 1¾ per cent in 2001. The projection for next year has been revised upwards by a quarter percentage point, primarily as a result of the Storting's decision to increase indirect taxes in the budget for 2000.

Wage growth is expected to slow the next few years, and is projected at 4¾ per cent in 1999 and 3¾ per cent in 2000 and 2001. The wage estimates remain unchanged in relation to the September Inflation Report.

Norges Bank projects that mainland GDP will expand by 1 per cent in 1999 and ¾ per cent in 2000. Growth is expected to move up to 1½ per cent in 2001. The growth forecasts for 1999 and 2000 have been revised upwards compared with the September report.

The turnaround in 1999 and 2000 will primarily be confined to manufacturing industry, which partly reflects weaker profitability and the deterioration in competitiveness, but is also the result of a decline in petroleum investment. The impact of the turnaround on total activity in the Norwegian economy will depend in part on the adaptability of the manufacturing sectors that are affected. Demand for labour in the public sector and service industries is expected to continue to rise.

The Inflation Report also presents medium-term projections for the Norwegian economy to 2003. In the years after 2001, higher growth and increased demand for labour may again push up cost inflation. Given the current projections, price inflation may then show a slight increase.