These developments, which should contribute to an improvement in the labour market as of 2005, are likely to be accompanied by continuing moderate inflation. Because of the rise in oil prices, inflation reached 1.3% (year-on-year) in October 2004, but the underlying rate was still only 0.5%.Continuing gradual monetary tightening is projected, with financial conditions becoming more neutral as spare production capacity is reduced. The consolidation of federal finances as of 2005 remains necessary, even if budget outturns in 2004 prove better than expected. The improved cyclical situation must not lead to a weakening of the efforts made to stimulate domestic competition and increase potential growth.

Population (000s), 2003	7 343
Area (000 sq km)	41
Currency	Franc
GDP (Billion USD), 2003	321.8
Life expectancy at birth (Women, Men), 2002	83.0, 77.8
Total labour force (000s), 2003	4 349
Government type	Federal Republic

Indicators	% change unless otherwise indicated
	2004	2005	2006
GDP growth	1.9	1.9	2.0
Consumer price index	0.8	1.2	0.9
Short-term interest rate (%)	0.5	1.6	2.4
Unemployment rate (%)	4.0	3.6	2.8
Current account balance (% GDP)	12.8	12.4	12.6

Source: OECD© OECD Observer No 245, November 2004