The economic recovery appears to have strengthened further in the fourth quarter of last year. Private consumption should continue to grow strongly, although business investment may slow slightly. Encouragingly, forward-looking indicators and surveys of business and consumer confidence remain very positive. As a result, we are forecasting GDP growth of around 2.1% in 2006 (after 2.5% in 2005). This would be the fourth consecutive year of above-trend growth, which should help ensure that the long period of deflation ends this year.
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