Summary:
- During 2005, the fast pace of growth prevailing in the economy from the second half of 2003 continued. Expansion was led by the business sector, and especially by the service sectors, and was clearly reflected in a marked improvement of the labor market.
- Per capita GDP and the rate of unemployment returned to their 2000 levels—before the recession. The growth in GDP during the year resulted from a substantial increase in the total factor productivity. However, the average rate of increase in total factor productivity from 2000 until 2005 was low.
- The boom in economic activity resulted mainly from relative quiet in the security front and from strong growth in the world economies, matched by a continuing recovery of the international high-tech sectors.
- The growth process was also due to responsible macroeconomic policies that were in step with their goals of price stability and deficits—this for the second year running and thus contributed to a reduction in the uncertainty and risk in the economy.
- The improvement in background conditions and economic policy stimulated an increase in demand, which was quickly matched, against the background of existing unutilized production factors—capital and labor.
- The service, trade and transportation industries grew significantly because of the increase in domestic demand, but this increase did not trickle down to the construction industry, which saw a decrease in output. Manufacturing product and exports grew only at moderate rates.
- During the year the rate of growth in exports slowed down, and industrial exports did not grow; this because the unique production factors in this sector were fully exhausted, and not because of a slowing in demand for exports.
- The government also made efforts during the year to increase competition in the maritime, air, public and communications sectors. These sectors have significant influence on the productivity and welfare of the overall economy.
Output, Uses and Principal Industries - Full File