Economic growth will remain subdued in 2015, but will strengthen and reach 1.7% in 2016. Going forward, easing geopolitical tensions, strengthening external demand and the depreciation of the euro will support export growth. The pick-up in trade and historically low interest rates provide a good environment for investment to recover. The income-tax reform will boost private consumption.
Close monitoring and supervision of banks is essential to revive confidence. Structural reforms in the service sector would boost competition and the diffusion of new technologies. Further increasing the labour participation of the elderly, and in particular of women, would help make growth more inclusive. Preparations for the planned alignment of women’s retirement age with those of men should be brought forward.
Investment rates, although declining recently, remain considerably higher than in other European countries, partly because of a higher share of residential construction and transport infrastructure investment. The share of intellectual property investment has risen markedly after the crisis and has partly offset declines in the share of business investments in buildings, structures and ICT equipment. Government initiatives towards the support of venture capital and crowdfunding as well as intense engagement within the European Fund for Strategic Investment have the potential to boost entrepreneurship and business investment.