Net exports are projected to taper off as rising unit labour costs hold back exports. With strong activity exerting inflationary pressures, core inflation is projected to creep up over the projection period.More intense competition is needed to provide a countervailing force to inflationary pressures in the short term and boost growth prospects in the long term. The proposal to repeal the Groceries Order (a regulation hampering competition in retail trade) is welcome in this regard, and deregulatory efforts should be broadened to other sheltered sectors, starting with the professions and network industries. A tighter fiscal stance would help to contain inflationary pressures and provide a buffer against adverse shocks from the housing market or the exchange rate.

Population (000s), 2004	4 044
Area (000 sq km)	70
Currency	Euro
GDP (Billion USD), 2004	181.6
Life expectancy at birth (Women, Men), 2002	80.3, 75.2
Total labour force (000s), 2004	1 920
Government type	Republic

Indicators	% change unless otherwise indicated
	2005	2006	2007
GDP growth	5.1	5.0	5.0
Consumer price index	2.3	2.5	2.6
Short-term interest rate (%)	2.2	2.2	2.9
Unemployment rate (%)	4.3	4.2	4.2
General government financial balance (% GDP)	-0.9	-0.6	-0.6
Current account balance (% GDP)	-1.5	-1.7	-1.0

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