Output growth is set to weaken further going into 2006, before rebounding to 3.5% in 2007 as domestic demand strengthens. Inflation should decelerate over the next two years, but a large inflation differential vis-à-vis the average for the euro area will remain. The current account deficit is expected to stay high.Sustained fiscal consolidation requires a better control of primary spending and decisive reforms in key areas of social spending and public administration. Reducing tax evasion and tax avoidance is likewise critical. Plans for improving the operation of public enterprises are welcome. Further progress in the structural reform agenda would provide a sounder environment for long-term growth.

Population (000s), 2004	11 060
Area (000 sq km)	132
Currency	Euro
GDP (Billion USD), 2004	205.2
Life expectancy at birth (Women, Men), 2002	80.7, 75.4
Total labour force (000s), 2004	4 823
Government type	Republic

Indicators	% change unless otherwise indicated
	2005	2006	2007
GDP growth	3.5	3.3	3.5
Consumer price index	3.6	3.4	3.0
Short-term interest rate (%)	2.2	2.2	2.9
Unemployment rate (%)	10.6	10.5	10.3
General government financial balance (% GDP)	4.5	-3.2	-3.6
Current account balance (% GDP)	-7.0	-6.7	-6.5

Source: OECD© OECD Observer, No. 252, November 2005