Solid growth but economic risks remain
Overview:
Economic growth has proved resilient throughout the global economic crisis. However, it will lower going forward than before the crisis especially as the global economy shows signs of slowing. Moreover, this solid growth should not deflect attention from two significant economic vulnerabilities: a large current account deficit and a high ratio of public debt to GDP. Tighter fiscal policy would help to improve the situation in both cases but budget planning remains weak. Current spending must be restrained to make room for more investment (given large debt service costs). The inflation targeting regime and associated flexible exchange rate have proved successful but more must be done to strengthen the export base. The tense political scene has diverted attention from passage of EU-related reforms.