The economy slowed abruptly in the first half of 2013, principally due to the delayed effects of weak export demand spilling over to the rest of the economy, thereby hurting consumer and investor confidence. As external conditions improve and government expenditure is stepped up, growth should rebound in 2014 and 2015.
Weak demand has muted inflation, despite some recent supply pressures from highly damaging weather conditions. The central bank cut policy rates in October to a record low, which should boost investment. Fiscal policy is expected to be stimulatory over the next year, with a temporary increase in the budget deficit envisioned prior to a rise in overall taxation. As confidence rebounds, exceptional spending may need to be tapered back, while monetary conditions will have to be adjusted to take account of the withdrawal of exceptional measures and higher potential growth from recent reforms.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.