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Output growth is projected to remain healthy, albeit moderating after the vigorous 2016-18 upturn. Exports will continue to benefit from expanding external demand and regained competitiveness. Private consumption will be supported by rising wages and improved employment. Inflation will pick up gradually as the economy nears full capacity.
The economic recovery and fiscal consolidation measures are stabilising government debt. Nevertheless, rising ageing-related costs pose a longer-term challenge to fiscal sustainability. Recent pension and labour market reforms strengthen public finances, but enhanced work incentives are needed to lift employment further. Efficiency gains are also key to continue providing high-quality public services in a sustainable way.
1. Maastricht definition.
Source: OECD Economic Outlook 104 database.