The first half of 2005 saw lower than expected economic growth as domestic demand weakened. With electoral uncertainty removed, the future should bring a gradual revival of private consumption and investment activity, while net exports may provide less support to growth.
Slow but steady improvement in the labour market should help sustain consumer confidence. However, growth may remain below its potential rate of over 4% until 2007.Despite slower economic growth, budget revenues came out above expectations and the general government deficit will be lower than planned. However, reform of public expenditure is still needed in order to ensure medium-term fiscal sustainability. A firm commitment to such reform by the new government might allow earlier relaxation of monetary policy, which has been quite tight recently, reflecting the burst of price inflation after accession to the EU.
|Population (000s), 2004||38 180|
|Area (000 sq km)||313|
|GDP (Billion USD), 2004||241.6|
|Life expectancy at birth (Women, Men), 2003 ||78.9, 70.5|
|Total labour force (000s), 2004||17 094|
|Indicators||% change unless otherwise indicated|
|Consumer price index||2.2||1.9||2.1|
|Short-term interest rate (%)||5.2||4.1||4.1|
|Unemployment rate (%)||17.8||16.9||15.6|
|General government financial balance (% GDP)||-3.4||-3.6||-3.3|
|Current account balance (% GDP)||-1.5||-0.9||-0.3|
© OECD Observer
, No. 252/253, November 2005