Real activity rose in 2007, but should moderate over the projection period as oil and metals prices stabilise around their current high levels. Domestic demand will continue to advance strongly, but net exports will exert a growing drag as imports surge while energy export volume growth is held back by supply constraints. Inflation is rising, propelled by steep rises in food prices, and validated by the central bank’s unsterilised intervention to manage the exchange rate, which has yielded very rapid money supply growth.