Growth is projected to gradually strengthen, driven by higher infrastructure spending and, as the euro area recovers, stronger output, exports and investment in the mining sector. Consumption growth will remain solid as low unemployment fuels real wage growth. Strengthening domestic demand will be associated with a further decline in the current account surplus relative to GDP. Inflation is now falling due to the good harvest, but as economic growth picks up the pace of underlying disinflation will slow.
Fiscal policy should be tightened gradually while allowing the automatic stabilisers built into the medium-term fiscal framework to work. Prioritisation and efficiency of public spending need to be improved. Even though the 2014 inflation target has been increased and utility prices will be partly frozen, interest rate cuts will not be appropriate until core inflation declines more rapidly. Strengthening potential growth through business climate improvements remains a priority. Reducing the excessive dependence on oil and gas revenues requires further efforts to remove entry barriers, improve skill matches on the labour market and increase the effectiveness of innovation support.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.
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