2  BIS Review 65/2006  Monetary policy and the euro area economy Turning to the international background for the Irish economy, developments have been broadly favourable. The global economy continued its robust expansion in 2005, withstanding most of the dampening influence of higher oil prices, and is projected to grow at a broadly similar pace in 2006.
Closer to home, the euro area recovery has gained momentum, with growth becoming more broadly based and sustained in the first-half of this year. While external trade continues to provide significant impetus to euro area growth, there are now also signs of an improvement in domestic demand. Business confidence has strengthened significantly and we have seen a welcome recovery in investment.