After slowing in 2007, growth is projected to average below 2% in 2008, with a weak first half but some rebound thereafter, and continuing at near potential rates in 2009. Job creation will continue, albeit at a slower pace, allowing for further slight declines in the unemployment rate. Following several years of budgetary consolidation, no further improvement in the budget deficit is expected, with a reduction in both revenues and spending in relation to GDP.
The recent fiscal stimulus package will contribute to sustaining demand in the near term. However, to strengthen longer-term growth prospects, planned reforms of public administration, pension schemes and labour contracts will have to be carried out so as to help contain public expenditure growth, achieve EU commitments and slow the decline in labour force participation.
No. 264/265, December/January 2008
• OECD Economic Outlook No. 82, December 2007
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