Real GDP grew by +2% in 2016. Exports growth continued to disappoint. Domestic demand was the main driver, supported by a strong fiscal policy.
In 2017, EH expects economic activity to somewhat accelerate (+2.5%) but remain well below the 10-year average (+5.5%, 2006-15). A gradual improvement in exports should be sustained by higher global demand. Reflation could bring some relief to turnovers and translate into a positive investment cycle.
Fiscal policy will remain flexible and supportive as it aims to address short-term challenges (limited export opportunities) and build strong foundations for the longer term (through innovation efforts, e.g.).
Short-term risks lie in a more protectionist US, weaker-than-expected demand growth in China and a tightening of global financial conditions. Insolvencies are forecast to increase by +12% in 2017.