Underpinned by relaxed monetary and fiscal policies, the economy picked up in 2004, with GDP growth set to be close to 2 per cent. The expansion should continue through 2005 and 2006 at much the same pace, slightly above potential, thanks to the more dynamic external environment. These developments, which should contribute to an improvement in the labour market as of 2005, are likely to be accompanied by continuing moderate inflation. Continuing gradual monetary tightening is projected, with financial conditions becoming more neutral as spare production capacity is reduced. The consolidation of Federal finances as of 2005 remains necessary, even if budget outturns in 2004 prove better than expected. The improved cyclical situation must not lead to a weakening of the efforts made to stimulate domestic competition and increase potential growth. ...