The slowdown in activity continued in conjunction with the slackening of the external environment and the appreciation of the franc. GDP growth, which was close to zero in 2002, should however pick up and reach around 1½ per cent in 2003, thanks to the international recovery and to an expansionary monetary policy. The improvement in the economic situation is unlikely to result in a fall in unemployment before mid-2003, while inflation could ease to less than ½ per cent.

The very accommodating stance of monetary policy is appropriate and should be maintained until the recovery is firmly established. But a more expansionary fiscal policy is hardly advisable, and would not be consistent with the new debt containment rule, which implies a stable cyclically-adjusted balance. There is a need to boost potential growth and this requires a more efficient factor utilisation, which should be stimulated by enhanced competition.