GDP growth is likely to slow temporarily to 2½ per cent in 2013, before picking up to around 3¼ per cent in 2014. The expected weakening of the boom in mining investment will be only gradually offset by the sector’s increasing export capacity and the strengthening of the non-mining sector. The persisting high exchange rate and still fragile confidence are inhibiting the emergence of new drivers of growth.
In the absence of inflationary pressures, monetary policy should remain accomodative in order to underpin activity. The authorities need to gradually balance the public budget so as to restore fiscal leeway. Should activity worsen significantly, however, there is scope for fiscal policy to be relaxed to support demand. A tax reform to improve the effectiveness of housing taxation and lower corporation tax by means of an increase in VAT would enhance efficiency.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.
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