Price pressures have built up recently, notably due to a large fall in the exchange rate but, as economic slack increases, they should recede steadily.

After the sharp upward revision of the general government deficit for 2008, the fiscal outlook looks considerably worse as the deficit is expected to continue to deteriorate in the next two years. As this will push the public debt close to the constitutional limit of 60% of GDP, the government will have to stand ready to implement fiscal consolidation measures once recovery begins in 2010. These should be accompanied by further monetary easing.

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©OECD Observer No 274, July 2009