|The pick-up in domestic demand, driven by household consumption and business investment, should continue to spur economic activity, with further support coming from the gradual firming of export growth. However, prospects remain fragile due to low confidence, weak competitiveness and fiscal consolidation. The unemployment rate is projected to fall slowly. Inflation will pick up in the course of 2015, but will remain modest due to limited imported price pressures.
With annual structural budget improvements of at least ½ per cent of GDP in the coming years, the government plans to reach a balanced budget in 2018. As planned, consolidation measures should be tilted towards expenditure restraint, since spending cuts would make room to lower the tax burden, especially on labour. A tax shift from labour to consumption and capital gains would also reduce labour costs and increase competitiveness.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.