Economic growth remained robust in the first half of 2004, boosted by domestic spending, and despite the ongoing drag from the foreign balance. Continued strong growth is expected in 2005 and 2006, with improving net exports offsetting the projected weakening in household consumption and residential investment. This should be accompanied by further employment gains and inflation staying within the Reserve Bank’s 2 to 3 per cent target band, underpinned by moderate wage increases and solid productivity growth. The upbeat economic outlook should allow the removal of the remaining monetary stimulus, to safeguard price stability. The projected small fiscal surpluses over coming years are appropriate, leaving room for automatic stabilisers to operate if the global recovery weakens or another drought develops in rural areas. ...