The economy was hit hard by the May-June 2006 turmoil in international markets, which served to underscore its remaining vulnerabilities, but has recovered rather rapidly. The current account deficit, which will likely reach a historically high level above 8% of GDP in 2006, continues to be financed by growing private debt and foreign direct investment. Strong GDP growth is expected to continue but risks remain.
Maintaining fiscal discipline is crucial, while monetary policy credibility needs to be bolstered, in particular by consolidating the independence of the central bank. The transparency and quality of fiscal institutions needs to be strengthened by adopting international accounting standards and multi-year spending targets for general government. Additional structural reforms are required to enhance the competitiveness of the economy, promote the formal sector and rein in the high current account deficit.
|Population (000s), 2005||72 064|
|Area (000 sq km)||781|
|GDP (Billion USD), 2005||586.7|
|Life expectancy at birth (Women, Men), 2004 ||73.6, 68.8|
|Total labour force (000s), 2005||25 065|
|Government type||Republican Parliamentary Democracy|
|Indicators||% change unless otherwise indicated|
|Consumer price index||9.6||7.9||5.7|
|Unemployment rate (%)||10.1||9.8||9.5|
|Current account balance (% GDP)||-8.1||-7.6||-7.0|
No. 258/259, December 2006