Growth rebounded significantly due tostrong industrial recovery aided by growth in investment andexports. Capital flows are back, signaling growing investorconfidence, as inflation has moderated from double digits,exchange rate has stabilized, and financial sector stresshas plateaued. Monetary policy continuity has beenmaintained and there has been some progress on fiscalconsolidation. With the economy still below potential andreform momentum picking up, growth is expected to strengthenover the medium-term. Inflation is expected to decline withmonetary policy switching to inflation targeting while thecurrent account deficit is expected to widen somewhat asimport demand and capital inflows rise. Fiscal consolidationis expected to continue through stronger revenuemobilization. Downside domestic risks can be offset throughaccelerated structural reforms.