|Economic growth is expected to strengthen as world trade picks up and real wage gains boost consumption growth. Improving confidence in the euro area recovery, low interest rates and pent-up replacement needs are projected to raise investment. The unemployment rate is expected to fall slightly. Consumer price inflation may rise to 2¼ per cent in end-2015 as economic slack is absorbed. The current account surplus will remain close to historic highs.
Fiscal policy should return to a neutral stance, consistent with the fiscal rule for the central government. At the same time, more room should be made for growth-enhancing spending, including infrastructure investment and full-day childcare facilities. Reducing high leverage among systemically important banks would make the economy more resilient to financial shocks. Structural reforms to deregulate services and further reduce the impact of socio-economic background on education outcomes would strengthen potential growth and contribute to global rebalancing.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.