Economic growth continues to accelerate in the first half of 2006. Export growth is being pulled along by improved competitiveness and fast-growing export markets. Business investment is benefiting from buoyant corporate profits. The recovery should broaden as private consumption gains strength on the back of higher employment, reaching 2.8% next year. Inflation is low, but should move towards the euro area level by the end of 2007. The fiscal position has improved considerably in the last two years and is set to remain balanced in cyclically-adjusted terms in 2006-07. However, in view of the large unfunded pension liabilities falling due in the long term, efforts should be undertaken to achieve larger structural surpluses.