Output is estimated to rise by 5 per cent in 2004 and is set to expand roughly at that pace in 2005 and 2006, driven by buoyant net exports and consumption. With excess demand persisting, inflationary pressures are expected to rebuild gradually. The economy is vulnerable to a rise in the euro exchange rate or in interest rates. Curbing inflation pressures in the medium term should rely on unleashing market forces in services, including in network industries and the liberal professions, and easing regulations in retail trade. Wage moderation should also be encouraged. ...