Growth slowed somewhat in 2003, to just below 3 per cent, but is projected to pick up progressively this year and next on the back of rapid export and investment growth to about 3¾ per cent by 2005. Inflation has picked up since mid-2003 and a further increase is expected up to the middle of this year, largely because of rises in regulated prices and value-added-tax rates. Postponement of entry into the Economic and Monetary Union to 2009 or 2010 is now envisaged, given a disappointing budget deficit outcome for 2003. Improvements to budget processes and a stronger commitment to sustainable spending cuts -- especially as 2006 is an election year - are needed to avoid a repeat of last year’s overshoot and further delay in reaping the gains from euro-area membership...