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The rate of expansion of real economic activity was estimated at 4.5% during the first nine months of 2005, on par with the 4.6% in the corresponding period of 2004. Unlike the previous two years when the economy was driven by the traded sectors, during 2005 the increase in real gross domestic product (GDP) occurred on the strength of nontraded activities. The combined effect of continued strong import growth, and an estimated decline in tourism receipts was a widening of the external current account deficit. Furthermore, the surplus on the capital and financial account was insufficient to prevent a contraction in the net international reserves (NIR). Liquidity tightened as commercial bank credit to the non-financial private sector remained robust despite hikes in domestic interest rates. Government’s fiscal deficit expanded when compared with the same nine-month period in the previous year.