We will need a flexible economy that allows to redirect resources rapidly and efficiently from those sectors that are losing appeal to those that are gaining it; a financial system able to weigh the risks and help new ventures thrive; and we must double our efforts to improve our productivity, and so on. The good news is, as I just mentioned, we have an appropriate macroeconomic policy framework to confront changes in the external environment and an economy that, having made significant adjustments, is now free of significant imbalances. This is why I believe that, never forgetting that we are a small and very open economy and therefore ever exposed to external shocks, we can look into the future with confidence. Thank you. 6  BIS central bankers’ speeches
High prices for oil and gas and other export goods also contributed to an appreciation of the krone last year. Partly due to very high growth in demand for oil, the average oil price rose to almost 40 US dollars per barrel in 2004. Lately, the price has risen to more than 50 US dollars. Oil futures prices have also risen. Strong demand growth, particularly in the US and China, has resulted in high energy consumption. As a result of strong demand growth in 2004, excess global production capacity, which is largely controlled by OPEC, has now fallen to a low level. Consequently, small disturbances in supply or demand could have a relatively strong impact on oil prices. The Norwegian economy experienced a moderate recession in 2002 and the beginning of 2003. Since the first half of 2003, growth has again been high. It may appear that growth in the Norwegian economy has become more self-driven. In the early phase of the recovery, private consumption, traditional exports and fixed investment in the petroleum sector were the most important driving forces. In the last few years, household demand has been underpinned by low interest rates, high real wage growth and higher asset prices. Real wage growth was relatively high in 2004, although nominal wage growth was lower than it has been in several years. Higher imports from low-cost countries and intensified competition in a number of industries have kept inflation at a low level. These factors have led to brisk growth in household purchasing power.