Output growth slowed sharply during the first half of the year, as high energy prices weighed on private consumption and weaker foreign markets on exports. The economy nonetheless retains considerable momentum, notably in the services sector, and should soon return to a faster pace. The rebound of confidence in manufacturing industries in recent months bodes well for a recovery, as does the increase in order books. The increase in headline inflation has triggered an indexation of salaries, which could have subsequent effects.
Fiscal automatic stabilisers have been allowed to operate freely during the slowdown and the public deficit has therefore exceeded 2% of GDP. The government should do more to rein in public spending, which has been growing at nearly two-digit rates.
|Population (000s), 2004||452|
|Area (000 sq km)||3|
|GDP (Billion USD), 2004||31.9|
|Life expectancy at birth (Women, Men), 2002||81.5, 74.9|
|Total labour force (000s), 2004||310|
|Government type||Constitutional Monarchy|
|Indicators||% change unless otherwise indicated|
|Consumer price index||3.9||3.2||2.0|
|Short-term interest rate (%)||2.2||2.2||2.9|
|Unemployment rate (%)||4.6||5.1||5.6|
|General government financial balance (% GDP)||-2.3||-2.1||-1.9|
|Current account balance (% GDP)||5.0||6.0||6.0|
© OECD Observer
, No. 252/253, November 2005