Expansion in Export Demand and Construction Activity

The recovery is gaining momentum. In the manufacturing sector the improvement, which was first evident in order books and then in the business climate, has now reached output. Activity in the construction sector was markedly stronger in the first quarter of 1994 than had been expected, with strong gains recorded in residential construction. Wage and price inflation remains subdued. The current cyclical upswing, which is strong relative to those of major trading partners, brings about a surge in imports, however. The rise in long-term interest rates has the potential to slow down the current upswing.