GDP growth is projected to gain momentum with both exports and domestic demand strengthening over the projection period. Yet slack will hold inflation pressures down for some time before price increases rise to above 2 per cent in 2015.
With diminishing spare capacity, the central bank will need to begin removing monetary stimulus by increasing its policy rate in 2014. The reform of the second-pillar pension system will reduce public debt and improve the general government balance but implicit public pension liabilities will increase. As growth is expected to pick up and monetary policy is set to remain fairly accommodative, the government has the scope to implement greater fiscal efforts in 2015 to reach the medium-term fiscal consolidation objectives faster than planned, while allowing automatic stabilisers to play around the structural consolidation path.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.