Worsening prospects for exports dampen economic growth in the coming years. Growth is expected to be 1.7% this year and 1.8% next year. Domestic demand is projected to be the main driver of growth this year, while investment is expected to decline next year as private and public consumption continue to grow.
Real private consumption is projected to grow by 3.2% in 2025. Leading indicators suggest that household expenditure accelerated in the third quarter, underpinned by rising real incomes and improving consumer sentiment. For 2026 and 2027, private consumption is forecast to grow by 2.4% and 3.0%, respectively, broadly aligned with the projected path of overall economic activity. Public consumption grew by 1.9% in 2024, with its share of GDP at 25.9%. Public consumption is forecast to grow by 1.7% this year and 1.2% in 2026, with growth easing in subsequent years.
This year, business investment is expected to grow by 7.7%, which can be attributed to substantial investment in information technology, particularly in equipment using artificial intelligence (AI) that is utilized in data centers. In 2026, business investment is expected to contract by 7.7% due to reduced investment in AI computer equipment. In 2027, 1.3% growth is projected in business investment. There are signs of slower activity in the construction sector, despite an increase in dwellings at the final stages of construction. Residential investment is projected to grow by 0.9% this year, 0.8% next year, and 4.7% in 2027. Public investment is projected to increase by 2.4% in the current year. During the first half of the year, public investment grew by 6.1%, primarily driven by the central government. Public investment is anticipated to grow by 7.9% in 2026 and 4.4% in 2027.
Recent shocks in key export sectors affect the outlook for external trade. Total exports are projected to increase by 1.4% this year, by 0.1% next year and by 4.7% in 2027. Imports have been strong so far this year but the growth is forecast to slow down and increase by 5.3% in 2025, followed by a 3% contraction in 2026. A trade deficit in goods and services is projected for this year, amounting to 1.5% of GDP but the balance is expected to turn to surplus in the following year.
Inflation has remained persistent. This year, the Consumer Price Index is projected to increase by an average of 4.1% year-on-year. Inflation is expected to ease as activity moderates in the economy and a tight labour market eases. In 2026, the Consumer Price Index is forecast to rise by 3.5%, and by 2.7% in 2027
Labour market conditions have softened relative to expectations outlined in the Summer Economic Forecast. The unemployment rate is expected to exceed earlier projections in both 2025 and 2026, peaking at 4.3% in 2026 before declining gradually over the remainder of the forecast horizon. Over the medium term, real wage growth is projected to align with collective wage agreements from 2024.
Household debt metrics continue to improve with respect to the ratio of debt to both GDP and disposable income. Households‘ ratio of interest payments to disposable income has remained broadly unchanged over the past two years. The non-performing loan ratio among private sector borrowers at deposit-taking institutions remains low by historical standards, suggesting continued financial health in the private sector. The net international investment position remains positive, with foreign assets exceeding external liabilities by 42% of GDP.
The last economic forecast was published on the 4 July 2025. The next forecast is scheduled for March 2026.
Economic forecast — Statistical Series