The effects of strong monetary and fiscal stimulus are gradually lifting the economy out of below-trend growth. Forward-looking confidence indicators look promising and unemployment is low. Inflation has declined and stabilised, albeit somewhat above the midpoint of the target range.
Growth is projected to pick up to about potential rates as stronger global growth, the depreciated real and recent measures to address the supply-side factors behind weak performance benefit investment and exports. Growth would be supported by further reducing the tax burden and tax complexity, containing labour costs, deepening long-term financial markets and improving infrastructure. The recently adopted trade protection measures, in contrast, could slow down productivity growth.