Driven by buoyant exports and strong private investment, output growth has gained momentum and should reach about 4 per cent this year and also in 2005 and 2006. Employment growth is likely to be muted, but nevertheless allow for a slight decline in unemployment. Inflation will remain close to 3 per cent. The momentum of fiscal reform needs to be boosted. A new budgeting framework has been introduced and needs to be effectively implemented. Also, concrete progress is needed on pension and healthcare reform. Monetary policy looks set to remain neutral in the near term although there are upside risks to inflation. Structural reforms to improve the business environment are needed to enable rapid real convergence. ....