Economic growth is projected to rise gradually from the trough in the level of real GDP reached in the first quarter of 2013 to about 1½ per cent in 2015, given less fiscal consolidation and improving economic prospects in the euro area. The national unemployment rate should stabilise slightly above 11% in 2014 before declining slowly. Despite VAT hikes, inflation pressure is likely to remain subdued.
Fiscal policy has been less tight in 2013 than initially planned, and the pace of fiscal consolidation is to be reduced further in 2014 and 2015. The automatic stabilisers should be allowed to play fully around the new structural consolidation path. Future fiscal efforts should focus on restraining public spending, especially by cutting inefficient and non-priority items. Accelerating the implementation of a wide range of structural reforms to boost medium-term productive capacity would facilitate consolidation and strengthen the credibility of fiscal policy.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.