This trouble spot has only worsened in 2025, and it poses a real threat to continued economic expansion in 2026 and 2027. Rising prices on food, electricity, and other services have only added to a difficult economic situation. Inflation continued to be low during 2024, averaging 1.7% year-over-year. It had reached a five-year high landing at 2.2% in December, so analysts are watching these trends very carefully as they develop.
During 2025’s first few months, healthy revenue collections offered a ray of sunshine amid storm clouds. Yet even with all that optimism, the overall government budget gap—the general government, as opposed to the special fund—is projected to grow. That’s a big jump—from 1.2% of GDP in 2023 to 1.8% in 2024. Projections show that this gap will only continue to increase, going as high as 2.5% of GDP in 2025. The government faces mounting pressures from a higher wage bill and increased social transfer obligations following the implementation of a minimum wage increase in January 2025.
We forecast above trend growth to reassert itself in the second half of our forecast window. Deep and dangerous risks still loom over this progress. The economic situation has only been made more difficult by the relief of persistent inflation, particularly in core sectors like food and energy. As food prices follow inflation and electricity prices soar, these households risk facing the purchasing power crunch later this year.
Service prices have increased accordingly, adding to the money troubles that consumers are already experiencing. As these costs continue to increase, the current rate of inflation risks outpacing wages, undermining economic progress and prosperity for all. After economic growth diminished to an average of just 1.8% year over year after the second half of 2025, economists are on edge. They’re still wary of the recovery’s prospects.