The economy grew briskly in 2006 on the back of a strong rebound in investment activity and robust consumption spending. Output growth is expected to continue to grow at around 3.75% over the next two years and unemployment is set to fall further. Headline inflation should decline, as the contribution from oil prices wanes, but remain well above the euro area average. The current account deficit is expected to remain high.
For the first time in many years the authorities may durably bring the deficit below 3% of GDP. However, fiscal objectives should now become more ambitious by aiming for a substantial primary surplus, given the high level of debt and favourable outlook for demand. Moreover, comprehensive reforms of the pension and health care systems are needed to ensure long-run fiscal sustainability.
|Population (000s), 2005||11 099|
|Area (000 sq km)||132|
|GDP (Billion USD), 2005||257.2|
|Life expectancy at birth (Women, Men), 2004 ||81.4, 76.6|
|Total labour force (000s), 2005||4 849|
|Indicators||% change unless otherwise indicated|
|Consumer price index||3.4||2.9||2.8|
|Unemployment rate (%)||9.6||9.2||8.8|
|General government financial balance|
|Current account balance (% GDP)||-10.8||-10.1||-9.7|
No. 258/259, December 2006