Cyclical Recovery At High Current Account Deficits. Economic Outlook for 1997 and 1998

Expansion of foreign demand will continue to be the driving force behind economic activity in 1997 and 1998, providing stimulus notably to industrial production and to investment in machinery and equipment. Domestic demand should stay weak under the impact of fiscal policy restriction. With real GDP growth projected at 1.2 percent in 1997 and 2.2 percent in 1998, unemployment may only level off in the latter year. Persistent current account deficits of more than 1½ percent of GDP are becoming a matter of policy concern.