Labor shortages and fragile investor confidence will constrain output growth. Policies will likely become more accommodative, thanks to a dovish ECB and Fed. The external financing and inflation outlook will remain challenging for some. Slow progress in addressing structural problems will intensify vulnerabilities.

Strong domestic spending has kept output above potential, intensifying inflation pressures. Weaker foreign demand should allow policies to remain accommodative in the near term. Labor shortages and reduced access to EU funds will be the main medium-term challenges.