Overall, the economy will shrink notably in 2009, before slowly recovering in 2010 along with the pick-up in world trade.

Although the fiscal situation is deteriorating sharply, automatic stabilisers should be allowed to work fully and, if necessary, further discretionary fiscal action could be contemplated to support demand. The government should maintain its focus on active labour market policies to limit the increase in long-term unemployment. In order to assure fiscal sustainability, pension reform should be pursued.

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©OECD Observer No 274, July 2009