Economic growth is set to decelerate to a rate of only 1.8 percent this year, with no stronger momentum in sight for 2006, even if the outlook is particularly uncertain at the present juncture. While the stimulus from exports is slackening, consumption and investment are failing to revive. Despite notable employment gains, the strong increase in labour supply is driving unemployment further up. The high price of oil is a major cyclical risk; in conjunction with domestic factors it is pushing headline inflation to a relatively high 2.5 percent this year. The decline of the euro against the dollar should benefit the European export industry.