After a period of strong economic growth, domestic demand, notably investment, is cooling and export markets remain weak. Consumer confidence and wage growth have started to trend down, though retail sales have been resilient so far. GDP growth is projected to fall below potential growth, but then pick up gradually to around 5% by 2015 as trading partners’ growth increases.
Following a period of disinflation, exchange-rate weakness and higher energy prices have brought inflation back up to within the central bank’s target range and inflation expectations remain well anchored. The authorities expect to achieve a structural fiscal deficit of 1% of GDP in 2013, which is projected to persist into 2014 and 2015. If activity weakens, both monetary and fiscal policies are in a strong position to respond.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.