Austria's economy is expected to grow by 2.4 percent in volume in 2006. Exports and gross fixed capital formation will sustain the cyclical recovery, while private household demand will hardly pick up from its current weakness. Inflation should decelerate, leading to moderate real income gains. The increase in budgetary funds for active labour market policy will prevent unemployment from rising further, but will, together with higher spending on other items, widen the government deficit.