GDP grew briskly in 2007. Output expanded by 4%, though economic activity slowed during the year reflecting a weakening in domestic demand. The economy is expected to grow by around 3½ per cent in both 2008 and 2009. Headline inflation has jumped but should ease back as the impact of the oil and commodity price hikes wanes. Inflation is likely to remain above the euro area average, however, thus weighing on competitiveness. The current account deficit is set to widen further.