Despite the slowdown in economic activity, employment increased strongly and unemployment continued to fall. However, the labour market is split into two parts, with falling employment in manufacturing and an increase in the services industry. At the same time, the floating exchange rate regime has contributed to a significant change in the pattern. Historically, a devaluation of the krona has been necessary at the climax of a crisis and on several occasions during the 1970s and 1980s crises were caused by the fixed exchange rate in combination with cost developments leading to a cost crisis. The slowdown in 2001 was different to the extent that industry’s competitiveness was very strong. The weakening of the krona began, fortunately, a year before industrial activity slowed down. This contributed to a very strong development in net exports during 2001. This is probably an important factor behind the slowdown being a slowdown rather than a recession in Sweden. Although there are otherwise major differences, it can be noted that the decline in GDP and exports in Finland was much greater than that in Sweden. While industrial production in Sweden decreased at most by 5 per cent, it fell by over 10 per cent in Finland. Whether this is due more to other factors than to the exchange rate is an open question, but it is reasonable to assume that the development of the krona subdued the decline in the Swedish economy. Certainly, it may have at the same time have aggravated the inflation problems.
But the precautionary measure has served us well. We will continue to be vigilant in anticipating issues, and in taking proactive measures to strengthen the resilience of our system. With regards to the flow of credit from banks to corporations, we believe this is best facilitated through government schemes to co-share some of the risks with banks. In February, the Government announced the Special Risk-Sharing Initiative (SRI). Under this Initiative, the Government will absorb 75% of the risk for insurance covering working capital and trade-financing loan facilities. The Government will also absorb 80% of the risk for bridging loans which go towards meeting firms' working-capital needs. We also have schemes for SMEs and micro-loans. Apart from ensuring that the financial system continues to function effectively, the Government has, as in past periods of downturns, used fiscal measures to minimise the impact of the crisis. This involves targeted help for families and companies, while continuing to build capabilities to prepare for the upturn. This time, a creative Jobs Credit Scheme has been added to help companies keep their workers. Conclusion Ladies and Gentlemen, these are very challenging times. The global economy is in recession, and the financial system remains fragile. We need tough, decisive and forwardlooking actions in the core economies that are deeply affected. Asian economies have also been severely affected, and policy adjustments are necessary. However, the medium-term prospects for growth remain strong.