Main challenges, macroeconomic developments and policies

摘要

Residential construction is slowing sharply towards a level which is sustainable in the long run and investors and consumers are also adjusting strongly to a marked deterioration in financial conditions in the wake of the international financial crisis, as well as to deteriorating job prospects. The slowdown is already having a significant impact on unemployment. Beyond this downturn some of the drivers of historical strong performance may weaken, notably vigorous credit growth, unusually low real interest rates in the wake of the adoption of the euro, exceptionally strong immigration and rapidly rising female labour force participation. An overall robust financial system in international comparison will help limit the economic consequences of shrinking housing-market activity and international financial market turbulence; and the ongoing large rise in tertiary attainment provides a significant potential to raise productivity growth, which has been weak on average over the past decade. However, in part as a result of strict employment protection for incumbent workers and low mobility, young qualified workers are often not employed in jobs commensurate to their skills, the inflow of young workers with a low education level into the labour market remains very large, and these workers are seeing their employment prospects deteriorate. The challenges will therefore be to improve the matching of workers to jobs so as to help limit the impact of the downturn on the labour market and improve the placement of highly qualified workers. Further reforms of the education system are also called for in order to cut the number of drop-outs from lower secondary school and to raise efficiency throughout the system. Reforms to intensify competition in product markets would also raise productivity performance.