This affected employment, and the resulting uncertain labour market situation had a dampening impact on private consumer spending which rose at a below-average rate. The real estate sector, by contrast, benefited from the continuation of favourable financing conditions. Oil prices rose again at the beginning of the year, continuing to act as a brake on the world economy, and the situation remained particularly gloomy in Europe. Given these developments, it is most unlikely that the 1.5% growth for 2005 forecast in the last monetary policy assessment will be attained. However, signs of an improvement in the Swiss economy became evident in the first quarter of the year, with exports picking up in April and May. We expect this trend to be confirmed in the months to come, and now forecast real GDP growth of about 1% for the year 2005 as a whole. This delay in the recovery of the economy will have a dampening effect on price developments in the year 2006. Now I would like to outline my assessment of monetary developments, which remain more or less unchanged with respect to the assessment presented in March. The three-month Libor rate has remained at a low level for a long time now: it has been below one percent for almost three years, since July 2002. Real rates of interest for three month maturities have been negative for two years. Given the unusually low level of interest rates, the willingness to invest in liquid assets remains high and, according to our estimates, the money overhang persists.
International capital markets play an important role for Norway. We drew on borrowing opportunities abroad when the petroleum industry was under development. We did the same in order to expand welfare schemes and to finance the countercyclical policy of the mid-1970s and the early 1990s. In the past 15 years, international financial markets have enabled us to convert national oil and gas resources into foreign equities and bonds. See chart “Real return on the fund” at the end of the speech. Since its establishment in 1998, the fund’s average annual real return after costs has been 2.9 per cent, or somewhat lower than the expected long-term return. This figure is marked by the challenging character of the financial crisis. The fund lost NOK 633 billion 4 in 2008, but a market reversal in 2009 has resulted in a positive return of NOK 716 billion over the past five quarters. So far, the fund seems to have fared relatively well through the most severe financial crisis for many decades. We still consider a real return of 4 per cent as realistic over time. This is based on the assumption that investment in sound government securities in the market can provide a reliable real return of about 2½ per cent. At the same time, the fund can reap a return of 2 to 2½ per cent in the long term from the three-fifths equity portion, some gains on corporate bonds and returns from active management.