In 2006 GDP is projected to grow by 2.25%, above potential. The general government deficit is likely to remain between 3.5% and 4% of GDP this year and next, not falling below 3% before 2006.Major reforms of labour and product markets are being phased in. While the short-run impacts on confidence and growth are ambiguous, it is clear that for economic performance to be raised in a durable way these reforms need to be continued and deepened within a coherent framework. Fiscal consolidation needs to be linked to more fundamental spending reform, requiring, for instance, the untangling of responsibilities across different levels of government, more determined reductions in both subsidies and tax expenditures and continued reform of the social security system.

Population (000s), 2003	82 502
Area (000 sq km)	357
Currency	Euro
GDP (Billion USD), 2003	2 401.9
Life expectancy at birth (Women, Men), 2001	81.3, 75.6
Total labour force (000s), 2003	39 507
Government type	Federal Republic

Indicators	% change unless otherwise indicated
	2004	2005	2006
GDP growth	1.2	1.4	2.3
Household savings ratio	11.1	11.1	10.8
Consumer price index	1.7	1.3	0.6
Short-term interest rate (%)	2.1	2.1	2.7
Unemployment rate (%)	9.2	9.3	8.9
General government financial balance (% GDP)	-3.9	-3.5	-2.7
Current account balance (% GDP)	3.3	3.9	4.7

Source: OECD© OECD Observer No. 245, November 2004