The government deficit exceeded 3% of GDP in 2004. If fiscal developments prove to be disappointing relative to the 2005 budget projections, beyond what can be explained by weaker than expected growth, then the government will need to take further measures to achieve a decisive reduction in the deficit.
With inflation having surprised on the upside and the prospect of a gradual return towards trend growth early next year, there is currently no compelling case for a further cut in interest rates. To raise potential growth a priority is to roll out the reform of the disability scheme nationally, while taking measures over the longer term to improve workforce skills.
|Population (000s), 2004||59 778|
|Area (000 sq km)||245|
|GDP (Billion USD), 2004||2 124.5|
|Life expectancy at birth (Women, Men), 2003||80.7, 76.2|
|Total labour force (000s), 2004||29 369|
|Government type||Constitutional Monarchy|
|Indicators||% change unless otherwise indicated|
|Household savings ratio||5.1||5.6||6.0|
|Consumer price index||2.1||2.1||1.6|
|Short-term interest rate (%)||4.7||4.5||4.5|
|Unemployment rate (%)||4.8||5.1||5.6|
|General government financial balance (% GDP)||-3.1||-3.0||-3.2|
|Current account balance (% GDP)||-1.8||-2.3||-2.7|
© OECD Observer, No. 252/253, November 2005