GDP is expected to contract by 3.8% in 2024 and rise by 3.6% in 2025 and 3.8% in 2026. The recovery in private consumption will be sustained by real wage gains amid declining inflation and a strengthening labour market. Investment will benefit from improving confidence as macroeconomic imbalances are gradually reduced, with further support from a new preferential regime for large projects. Imports will recover as domestic demand increases, outpacing export growth. Delays implementing planned reforms are a major downside risk to the projections.
Fiscal consolidation should continue. The central bank has been reducing its quasi-fiscal liabilities and closing several indirect sources of money creation. Easing import restrictions and currency controls would provide an additional boost to growth. Yet, higher domestic real interest rates will be needed to bolster demand for domestic-currency assets as currency controls are relaxed. The continuation of ongoing product and labour market reforms is necessary to improve the business environment, and increase productivity and incomes.