Growth should remain moderate at 2½ per cent in 2014, before gradually accelerating toward its potential rate of 3% in 2015. The slower pace of mining investment should be offset by the gradual strengthening of non-mining sectors, which will benefit from recent improvements in confidence, the currently lower exchange rate and expansionary monetary policy.
In the absence of inflationary pressures, a continued policy of monetary accommodation will be needed to sustain demand once the mining investment cycle comes to an end. It will also be important to avoid any additional tightening of fiscal policy in the short term above that already factored in. The authorities' medium-term objective of restoring some room for manoeuvre on fiscal policy is welcome. This should be accompanied by a tax reform that will make real estate taxation more efficient and reduce the corporate tax burden to encourage the restructuring now underway in the economy.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.