|Output is projected to start growing again in 2014 as stronger foreign demand boosts exports. Sustained weaknesses in the banking sector and needed debt reduction in the corporate sector will weigh on investment, while continued fiscal consolidation will be a further drag on demand. With a gradual recovery in domestic demand and continued pick-up in exports, activity should gather pace in 2015. Large slack and high unemployment will keep inflation low.
Restructuring over-indebted companies should proceed without delay, accompanied by privatisation and improved corporate governance. Consolidation in the banking sector is warranted and bank supervision should be strengthened. The resolve to contain public debt should continue, although the automatic stabilisers should be allowed to operate fully. A new pension reform will soon be needed. Active labour market policies could be strengthened and labour market duality reduced further.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.