Bulgaria's economy contracted dramatically after 1989 with the loss of the market of the Council for Mutual Economic Assistance (COMECON) member states, to which the Bulgarian economy had been closely tied. The standard of living fell by about 40%, but it regained pre-1990 levels in June 2004. In addition, UN sanctions against Yugoslavia and Iraq took a heavy toll on the Bulgarian economy. The first signs of recovery emerged in 1994 when the GDP grew and inflation fell. During 1996, however, the economy collapsed due to lack of international economic support and an unstable banking system. Since 1997 the country has been on the path to recovery, with GDP growing at a 4–5% rate, increasing FDI, macroeconomic stability and EU membership set for 2007. The former government, elected in 2001, pledged to maintain the fundamental economic policy objectives adopted by its predecessor in 1997, i.e., retaining the Currency Board, practicing sound financial policies, accelerating privatisation, and pursuing structural reforms. Economic forecasts for 2005 and 2006 predict continued growth in the Bulgarian economy. The annual year-on-year GDP growth for 2005 and 2006 is expected to total 5.3% and 6.0%, respectively. Industrial output for 2005 is forecast to rise by 11.9% year-on-year, and for 2006—by 15.2% year-on-year. Unemployment for 2005 is projected at 11.5% and for 2006—at under 10%. On April 25, 2005 Bulgaria signed the Treaty of Accession with the European Union and is set to join the bloc in 2007.