As from 2006, it is assumed that nominal growth in general government expenditure will be approximately the same as nominal growth in general government revenues and that the real tax level will remain unchanged. Growth in the euro area and Japan was weaker towards the end of 2004 than projected in the November Inflation Report. It appears that it will take time for structural changes that have been implemented, in Germany for example, to contribute to an increase in output. In the US, on the other hand, economic growth remains firm and capacity utilisation is rising. Even though developments in the US economy are favourable, higher interest rates, among other factors, will gradually result in an increase in household saving. At the same time, the plans call for a lower rise in government spending. Weaker growth in US demand may imply slower growth also in other countries. In addition to the euro area, economic growth is expected to slow in the UK and Sweden. On balance, we assume that growth among our trading partners will slacken this year and stabilise in the years ahead. Growth in Asia, except Japan, and in Central and Eastern Europe is expected to moderate but to remain strong. Robust expansion in China and India has in particular pushed up prices for oil and other important commodities. Growth impulses to the Norwegian economy may therefore be somewhat stronger than the overall outlook for our most important trading partners would indicate.
Among the companies in our regional network, the share expecting a sharper rise in selling prices is larger than the share expecting a slower rise in prices. TNS Gallup’s business sentiment survey gives a more neutral impression. Nevertheless, both surveys indicate expectations of a sharper rise in prices in the service sector. The other Nordic countries have also experienced falling inflation. BIS Review 18/2005  3  Inflation in the Nordic countries has declined, and is now relatively low in Sweden, Denmark, Finland and Norway. According to the harmonised indices of consumer prices, inflation in February was around 1 per cent in Denmark, Sweden and Norway, while the rise in prices remained unchanged in Finland, as measured by 12-month changes. By comparison, price inflation in the euro area was close to 2 per cent. A common feature of the low level of inflation in the Nordic countries seems to be the trend in prices for imported consumer goods, even though developments have not been entirely the same in all the Nordic countries. The upturn is broadly based, and its effects are no less pronounced here in Rogaland. Demand is increasing in all sectors, particularly in oil-related industries and the construction sector. The market outlook for export-oriented and oil-related industries in the next six months is very bright and optimism is greater now than in the previous round of interviews. Domestically oriented manufacturing has not experienced large fluctuations in demand and output to the same extent.