There has always been a considerable risk from having a large share of the nation’s wealth linked to a single commodity. But this share has fallen. Only a decade ago, oil and gas reserves made up two-thirds of Norway’s petroleum wealth. Today that share has dropped to about a third. Our aggregate wealth has become more diversified, which means we can tolerate slightly higher volatility in our financial wealth. The Government has today announced that it will propose an increase in the equity allocation in the oil fund to 70 percent. At the same time, the estimated expected real return on the oil fund is adjusted down to 3 percent. The choice of equity allocation is an important decision. But an even more important choice is the level of oil revenue spending. Fluctuations in the value of the fund present challenges for fiscal policy and for the fiscal rule. Let me comment somewhat further on this issue. The oil fund and the fiscal rule have long been important pillars of Norwegian economic policy. One key goal has been to preserve large parts of our petroleum wealth for future generations. There has also been an explicit desire to shield the Norwegian economy from swings in oil prices. Allow me to quote from the Revised National Budget for 1995: “Revenues from the petroleum sector vary more over time than other revenues.
These surpluses have declined in the past few years. Oil and gas production passed its peak more than a decade ago. We may find once again that these resources have been underestimated. But the oil price collapse and developments in the Norwegian economy in the past few years have reminded us of an inescapable fact; we must drive forward a larger non-oil tradable sector. We need more legs to stand on. The needed structural adjustments in the Norwegian economy will have to be dealt with against the backdrop of more global challenges. Demographic changes and sagging productivity growth may point towards persistently low growth in advanced economies. Protectionist tendencies and reduced trade in goods and services could put an additional drag on growth. We must also make changes to consumption and production methods in order to reduce greenhouse gas emissions. This evening I will take a closer look at these challenges. Is low growth here to stay in advanced economies? In the long term, there are two factors that determine how quickly an economy can grow: the 2/9  BIS central bankers' speeches  supply of labour and labour productivity. Chart: Working age population The decline in the working age population is weighing on the growth outlook for many countries. The large post-war cohorts are leaving the labour force, and the consequences of a long period of low fertility rates are becoming increasingly clear. At the same time, the proportion of the population who are employed remains low in many countries.