After a sharp recession, the economy looks set to grow again on the back of a recovery in world trade, fiscal stimulus and easier monetary conditions. However, growth will be too weak to prevent further increases in the unemployment rate, one of the lowest in the OECD, until the end of 2010. As companies need to restore profitability they will continue to shed workers throughout 2010. The resulting improvements in profitability should lay the foundation for renewed investment growth and hence a more durable recovery in 2011. The fiscal stimulus has contributed to a budget deficit around 4.5% of GDP in 2009. To restore fiscal sustainability, the government should pursue its consolidation plan set to start in 2011. The planned two-step increase in the retirement age will help meet this objective but would be more effective with a phased-in implementation. Further focus on active labour market policies and easing of labour protection legislation would help stimulate employment growth.

The economy underwent a strong contraction at the end of 2008 and in early 2009 as exports and private investment collapsed. However, unemployment has only recently started to increase, from a low level.

After coming to a halt in mid-2008, growth will turn negative in 2009. The following year a recovery will get under way as stronger domestic demand is underpinned by easier monetary policy, real income growth is supported by lower inflation, and exporters benefit from stronger world trade. However, a tight labour market will create some persistence in core inflation.

The number of broadband subscribers in the OECD rose to 235 million by December 2007, up 18% from 200 million subscribers in December 2006.This growth increased broadband penetration rates to 20 subscriptions per 100 inhabitants, up from 16.9 in December 2006.

The economic expansion remained strong in 2007 and is expected to reach 3% for the second year in a row. Over the projection period above-potential growth is projected to continue, reflecting both robust domestic demand and dynamic export markets. However, labour shortages are likely to persist, partly reflecting population ageing, which will increasingly hamper the expansion of the economy. Indeed, inflation pressures are expected to increase gradually.

Despite the dot.com crash of 2001, growth in broadband has been strong. Indeed, the number of broadband Internet connections in OECD countries has risen from an average of 2.9 subscribers per 100 inhabitants in 2001 to 13.6 per 100 in December 2005.