Post-Olympic effects persist
The economy has slowed during 2005, mainly as the result of a post-Olympic slump in investment activity, though it continued to outpace the euro area’s average.
Output growth is set to weaken further going into 2006, before rebounding to 3.5% in 2007 as domestic demand strengthens. Inflation should decelerate over the next two years, but a large inflation differential vis-à-vis the average for the euro area will remain. The current account deficit is expected to stay high.Sustained fiscal consolidation requires a better control of primary spending and decisive reforms in key areas of social spending and public administration. Reducing tax evasion and tax avoidance is likewise critical. Plans for improving the operation of public enterprises are welcome. Further progress in the structural reform agenda would provide a sounder environment for long-term growth.
|Population (000s), 2004||11 060|
|Area (000 sq km)||132|
|GDP (Billion USD), 2004||205.2|
|Life expectancy at birth (Women, Men), 2002 ||80.7, 75.4|
|Total labour force (000s), 2004||4 823|
|Indicators||% change unless otherwise indicated|
|Consumer price index||3.6||3.4||3.0|
|Short-term interest rate (%)||2.2||2.2||2.9|
|Unemployment rate (%)||10.6||10.5||10.3|
|General government financial balance (% GDP)||4.5||-3.2||-3.6|
|Current account balance (% GDP)||-7.0||-6.7||-6.5|
© OECD Observer
, No. 252, November 2005