Recovery should continue
The recovery that appears to have gained hold in the second half of the year should continue into 2006. Domestic demand is expected to pick up slightly and exports should recover. Modest employment gains will permit only a small drop in unemployment.
Inflation is likely to fall back somewhat as the secondary effects of higher energy prices appear to be small. The general government deficit is likely to remain above 3% of GDP.While the shortfall on the target for reducing the budget deficit may be largely due to low growth, firm measures to reduce it significantly over the next few years remain necessary. Moves to simplify parts of the tax system are welcome; introducing more tax breaks for certain activities unfortunately offsets this, adding to the system's complexity. Social unrest calls for policies to improve prospects for the excluded. Fundamental labour market reforms, including liberalising regulations that restrict job opportunities for the low-skilled, should be a key component.
Population (000s), 200460 200
Area (000 sq km)549
GDP (Billion USD), 20042 046.7
Life expectancy at birth (Women, Men), 2003 82.9, 75.8
Total labour force (000s), 200427 351
Government type Republic
Indicators% change unless otherwise indicated
GDP growth1.62.12.2
Household savings ratio11.611.411.5
Consumer price index1.91.71.1
Short-term interest rate (%)
Unemployment rate (%)
General government financial balance (% GDP)-3.2-3.2-3.0
Current account balance (% GDP)-1.6-1.4-1.1
Source: OECD© OECD Observer, No. 252/253, November 2005

Economic data


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