Real GDP growth is expected to gain momentum in 2006 and 2007, but is likely to lag the average growth in the euro area, with the economy still operating well below its potential. Unemployment may not start decreasing until late in 2007.
Fiscal consolidation remains the key policy challenge. After a major slippage in 2005 due to strong social expenditure and the cancellation of all one-off measures, the deficit is expected to narrow somewhat over the projection period as a result of higher tax rates, spending freezes and more in-depth reforms on the expenditure side.
|Population (000s), 2004||10 509|
|Area (000 sq km)||92|
|GDP (Billion USD), 2004||167.7|
|Life expectancy at birth (Women, Men), 2003||80.6, 74.0|
|Total labour force (000s), 2004||5 448|
|Government type||Parliamentary Democracy|
|Indicators||% change unless otherwise indicated|
|Household savings ratio||11.7||11.7||11.7|
|Consumer price index||2.1||2.4||1.4|
|Short-term interest rate (%)||2.2||2.2||2.9|
|Unemployment rate (%)||7.5||7 .8||7.7|
|General government financial balance (% GDP)||-6.0||-4.9||-4.6|
|Current account balance (% GDP)||-9.3||-9.4||-9.1|
© OECD Observer, No. 252/253, November 2005