GDP growth is expected to continue in the 5.5% to 6.5% range and employment growth is picking up. However, inflation risks are re-emerging and structural unemployment remains very high.
Investment in new automotive plants and high oil prices suggest that the current account deficit will remain wide in the short term, though thanks to strong FDI flows, this high temporary deficit is not expected to pose any risks.Both fiscal policy and monetary conditions have recently been stimulatory, given the impact of transfers from the EU, continued low policy interest rates, and a stable exchange rate. Both will need to tighten over the projection period, in order to damp inflation risks, further reduce the fiscal deficit, and ensure that the plan to adopt the euro in January 2009 remains credible.
|Population (000s), 2004||5 382|
|Area (000 sq km)||49|
|GDP (Billion USD), 2004||41.1|
|Life expectancy at birth (Women, Men), 2002 ||77.8, 69.9|
|Total labour force (000s), 2004||2 659|
|Government type||Parliamentary Democracy|
|Indicators||% change unless otherwise indicated|
|Consumer price index||2.8||4.3||2.8|
|Short-term interest rate (%)||2.6||2.9||3.7|
|Unemployment rate (%)||16.4||15.8||15.2|
|General government financial balance (% GDP)||-4.1||-4.2||-3.5|
|Current account balance (% GDP)||-6.7||-6.6||-2.9|
© OECD Observer
, No. 252/253, November 2005