Economic growth, mainly driven by exports in the automotive sector, slowed in the second half of 2012, but was still among the strongest in the OECD area. The economy is projected to pick up slowly through 2013 and grow by about 3½ per cent in 2014 on the back of stronger world trade. Private consumption is likely to remain subdued due to the weak labour market and significant fiscal consolidation.
Reaching the budget deficit target of 3% of GDP by 2013 would be a welcome step towards the long-term sustainability of public finances and will require a strong consolidation effort. Spending restraint should avoid affecting growth enhancing items like education and active labour market policies.