Strong growth through the five years to 1998 was induced by a strong expansion in the private sector due to the improvement in competitiveness in the early 1990s, a significant fall in interest rates in 1993 and higher oil investments. It necessitated a fiscal and monetary policy tightening, which, together with a drop in oil investment, has damped activity since then. Despite moderate output growth in recent years, the labour market has remained tight (Figure 1), causing a sharp deterioration in competitiveness. Furthermore, as Norway is the world’s third largest oil exporter behind Saudi Arabia and Russia, the high oil price since 2000 has led to very large current account and government surpluses.