Context. Economic activity remained strong driven by garments exports, real estate, and construction. Inflation decelerated strongly in late 2014 due to the sharp decline in oil prices and REER appreciation. While the outlook remains broadly positive, it is subject to substantial domestic risks as a result of rapid credit growth. External risks include weaker-than-expected growth in the EU and China and continued appreciation of the U.S. dollar. Safeguarding macro and financial stability. Rapid credit growth, increasingly financed by bank flows from abroad, and with greater exposure to the real estate and construction sectors, poses significant macro financial risks. Raising reserve requirements and introducing well-designed macroprudential policies would help to moderate the pace of credit growth. Better monitoring of real estate developments is needed to contain risks. Further strengthening banking supervision and the regulatory framework, and completing a broader crisis management framework would support macro-financial stability. Securing a strong fiscal buffer while meeting development needs. Deficits have been reduced on strong revenue performance. Continued fiscal consolidation is necessary to maintain adequate government deposits in view of spending pressures from a higher wage bill and an expected fall in official assistance. Steadfast implementation of the Revenue Mobilization Strategy is needed to safeguard fiscal space, and provide resources for development. Future public wage increases should be contingent on fiscal performance, and be accompanied by broad civil service reform. Promoting competitiveness, diversification, and inclusiveness. The changing patterns of China's trade and further regional integration through the ASEAN Economic Community provide opportunities for economic diversification. Greater investment in human capital and improving the business climate will help sustain robust growth and enhance competitiveness, foster economic diversification, and inclusiveness.
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|Size: ||10.7 MB|
|Publisher: ||INTERNATIONAL MONETARY FUND|
|Date published: || 2015|
|ISBN: ||9781513599823 (DRM-EPUB)|
|Read Aloud: ||not allowed|