The optimism of the latter is best reflected in the historically high level of consumer confidence and stems partly from the on-going improvement of the situation on the labour market. Household consumption, which has been resilient in 1999 despite the temporary economic slowdown, is therefore expected to continue to grow rapidly this year.
This holds especially when the nature of capital inflows is short term and sensitive to various shocks, since such shocks could cause a sudden reversal of capital flows and subsequently a domestic financial crisis following the bursting of a bubble.