Output is projected to grow at a steady 5% rate over the entire projection period. Robust household income gains and government spending will be the engines of growth.
Net exports are projected to taper off as rising unit labour costs hold back exports. With strong activity exerting inflationary pressures, core inflation is projected to creep up over the projection period.More intense competition is needed to provide a countervailing force to inflationary pressures in the short term and boost growth prospects in the long term. The proposal to repeal the Groceries Order (a regulation hampering competition in retail trade) is welcome in this regard, and deregulatory efforts should be broadened to other sheltered sectors, starting with the professions and network industries. A tighter fiscal stance would help to contain inflationary pressures and provide a buffer against adverse shocks from the housing market or the exchange rate.
|Population (000s), 2004||4 044|
|Area (000 sq km)||70|
|GDP (Billion USD), 2004||181.6|
|Life expectancy at birth (Women, Men), 2002 ||80.3, 75.2|
|Total labour force (000s), 2004||1 920|
|Indicators||% change unless otherwise indicated|
|Consumer price index||2.3||2.5||2.6|
|Short-term interest rate (%)||2.2||2.2||2.9|
|Unemployment rate (%)||4.3||4.2||4.2|
|General government financial balance (% GDP)||-0.9||-0.6||-0.6|
|Current account balance (% GDP)||-1.5||-1.7||-1.0|
© OECD Observer
, No. 252, November 2005