The gradual recovery is continuing. Activity has been expanding at a pace just slightly ahead of potential, while the labour market has recovered very slowly. The housing market has shown signs of a turnaround, but its contribution to overall GDP growth remains small. Faced with these developments, the Federal Reserve announced in September that it would take further measures to sustain the upturn through a new round of long-term asset purchases, and that the federal funds rate was likely to remain at exceptionally low levels at least through mid-2015. Nevertheless, given the substantial fiscal drag still ahead, output is projected to expand only moderately next year and pick up slowly thereafter.

After strong growth in the first half of 2012, supported by reconstruction spending in response to the 2011 Great East Japan Earthquake, the recovery stalled, reflecting the slowdown in world trade and weaker domestic demand. While the economy is projected to pick up in 2013, annual growth may be limited to around ¾ per cent in both 2013 and 2014, as reconstruction outlays wane and planned tax hikes damp private consumption. The unemployment rate will remain above its pre-2008 crisis level.

The euro area is in a recession, driven by faltering confidence, which is projected to persist into the early part of 2013. Growth is projected to pick up only slowly during 2013 and into 2014. On-going fiscal consolidation will hold back activity, but private demand will pick up as confidence and the functioning of the financial sector improve. Continued high unemployment and a large margin of excess capacity will depress inflationary pressures. The main risk is a lack of sufficient progress by policy makers in resolving the crisis.

The economy is weakening markedly as world trade has slowed. Unusually low interest rates are supporting domestic demand, raising imports and reducing the current account surplus. As export markets recover, real GDP is projected to expand by ½ per cent in 2013 and by 2% in 2014. Unemployment is projected to rise somewhat in 2013. Consumer price inflation is projected to remain close to 2%, on the back of rising energy prices and robust domestic demand.

Activity has been more or less stagnating since late 2011, and real GDP is projected to rise by only 0.3% in 2013, but then to expand by 1.3% in 2014. Joblessness and slack more generally will therefore continue to increase until late in the projection period, when the unemployment rate could reach 11¼ per cent. With weak growth, consumer price inflation is expected to fall gradually to below 1½ per cent per year.

Italy’s comprehensive policy of growth-friendly structural reforms and fiscal consolidation is well underway. Nonetheless, the economy is projected to continue contracting in the short term, reflecting budgetary tightening, weak confidence and tight credit supply. Weak growth will put further downward pressure on employment, wages and consumer prices. With gradual improvements in competitiveness, confidence and financial conditions, the economy is projected to return to growth during 2013.

The global economic slowdown, euro area uncertainty, necessary fiscal retrenchment and private deleveraging are generating headwinds for the economy. Output remains about 3% below its pre-crisis peak. Growth is projected to recover gradually and gain momentum towards the end of 2013, as exports and household spending pick up as confidence recovers. Although employment grew strongly in 2012, unemployment is expected to rise slightly in 2013, as the subdued recovery and continued uncertainty may make firms hesitant to hire.

Economic growth has softened as the year has wore on and is likely to remain only moderate until mid-2013. Housing investment and house prices are set to cool somewhat in response to tighter mortgage rules to prevent households from becoming over-extended. The public sector is consolidating, and exports are being held back by poor competitiveness and weak global growth. Business investment should remain relatively strong, however, thanks to global demand for natural resources, low capital costs and corporate tax rates, and the high exchange rate, which is reducing the price of imported capital equipment.

Output is projected to expand by roughly 3¼ per cent in 2013 and 2014, which would be slightly below potential. Despite the decrease in the terms of trade, the mining sector can still be expected to sustain growth which remains marked by substantial sectoral disparities. Nevertheless, the high exchange rate, continued household deleveraging and budget-tightening in 2012/13 should damp activity in many other sectors.

After moderate growth in early 2012, activity stagnated in the latter half of the year due to softening external demand and deteriorating confidence, which offset gains in real disposable income and generally favourable financing conditions. Both domestic and external demand will benefit from gradually improving confidence and strengthening world trade over the forecast horizon, and growth is projected to reach 0.8% in 2013 and 1.8% in 2014.

The economy is recovering slowly from a broad-based contraction in spring 2012, which reflected weak domestic demand, fiscal consolidation and slowing exports. A gradual pick-up is projected as world trade gathers pace and the dissipation of the euro area crisis strengthens confidence. The unemployment rate will rise through 2013, but stabilise in 2014.

Growth has been robust in 2012, primarily supported by domestic demand, reflecting real wage growth and strong job creation. Despite intense utilisation of production capacity and low unemployment, headline and core inflation have remained in the lower part of the central bank’s tolerance range of 2-4%. With weakening global conditions, activity is projected to slow next year. As export markets – notably China – strengthen in late 2013, growth is projected to pick up again in 2014 to about 5½ per cent.

The economy contracted in 2012 due to the impact of fiscal consolidation on private consumption expenditures and the effects on investment of uncertainty about the euro area. The economy is projected to recover slowly in 2013 as domestic demand strengthens and external conditions improve. Indirect tax increases are temporarily boosting inflation, but inflation expectations are well anchored.

Growth has been weak but is projected to gain some strength from the second half of 2013, supported by low interest rates. The labour market is likely to remain weak, but unemployment is projected to start to decline in 2013. Private consumption is being held back by uncertainty and deleveraging but is expected to gather strength as confidence improves.

Growth is projected to accelerate in 2013 as improving external conditions give a boost to exports. While public investment will contract, private investment will pick up, driven by rising capacity utilisation and the planned modernisation of energy and transport infrastructure. Private consumption growth will be underpinned by increasing employment and wages. Headline inflation will continue to fall due to softening commodity prices, even while domestic price pressures are strengthening.

The economy is slowing, with the worsening external environment hitting exports of capital goods particularly hard. Falling confidence, weak real income growth and continued fiscal consolidation will hold back activity and employment in 2013. The expected global recovery in 2014 and strengthening confidence should revive exports, consumption and investment and gradually bring down unemployment. The tax-driven hikes in inflation to well above the euro area average should fade in 2014.

The economy contracted further in 2012 owing to strong, but absolutely necessary, fiscal consolidation, declining wages and confidence, and weak external demand. Unemployment has risen to historical highs. A return to positive growth is projected only towards the end of 2014 as world trade strengthens, confidence returns and competitiveness improves.

Hungary fell back into recession in 2012, but real GDP is projected to expand from mid-2013. Headline inflation accelerated sharply owing to higher fuel and food prices, and hikes in indirect taxes. Inflation expectations have risen above 6%, calling into question the credibility of the inflation target.

Following a deep recession, the economy has grown steadily since late 2010. The recovery, which is being led by private consumption and residential and business investment, is projected to continue with growth at just over 2½ per cent in both 2013 and 2014. Inflation is set to fall sharply from almost 6% in spring 2012 to 3½ per cent by 2014, but to remain above the authorities’ target of 2.5%.

While marked progress has been made in resolving the financial and banking crises, economic growth is projected to remain low, but positive, during the next two years. The weak European economy, accounting for a majority of Irish exports by destination, will make it difficult to offset the drag from ongoing fiscal consolidation, household deleveraging, low credit availability and subdued sentiment. Weak growth makes it unlikely that unemployment will decline substantially from the current high levels. Ample spare capacity will keep inflation low.

Output growth has flattened out. However, driven largely by external demand, economic growth is projected to start picking up in the first half of 2013. Inflation remains moderate, but underlying price pressures will strengthen as the economy gathers momentum.

Following a pause in mid-2012, output growth is projected to pick up gradually to around 4½ per cent by 2014, led by a rebound in exports as world trade gains momentum. Private consumption is likely to remain subdued, given the high level of household debt. Inflation, which has fallen to less than 2%, is expected to return to the central bank’s target range of 2.5-3.5%.

Growth has stalled, reflecting a slowdown in exports. A moderate pick-up in growth is projected to begin towards 2014 as external demand and confidence recover. Unemployment is set to rise, but then to stabilise as demand picks up. Core inflation will remain above the euro area average, driven by the backward-looking wage indexation mechanism.

Despite the global slowdown, Mexico’s economy has been expanding rapidly and formal employment has been rising, supported by strong domestic demand and exports. The weak recoveries of Mexico’s key trading partners and falling external demand in late 2012 will moderate exports and investment into mid-2013. As world and in particular US demand picks up in late 2013 and into 2014, growth will gradually strengthen to around 3½ per cent by 2014.

After a slowdown in the second half of 2012, activity is projected to gather pace gradually, driven by stronger world trade and, in turn, business investment. In contrast, private consumption will remain depressed as real incomes decline further in 2013, reflecting cuts in social spending and private pensions, higher VAT and a deepening of the housing market crisis. Only in 2014 will growth return to potential and unemployment stabilise.

The economy is set to expand at only a modest pace with headwinds from weak external demand, a strong currency, high household indebtedness and fiscal consolidation. Post-earthquake rebuilding will provide the main impetus over the coming two years through buoyant investment activity.

Strong growth will continue into 2013 and 2014. Investment in the petroleum industry will give way to consumption as the main source of demand growth for the mainland economy. External demand will initially be very weak but recover somewhat in 2014. Demand for labour will remain buoyant. Low import prices and exchange rate appreciation have helped to keep inflation low, but it will rise through 2014.

Growth is projected to slow considerably in coming quarters as a result of weaker domestic and external demand. However, activity should pick up again in the second half of 2013 and strengthen further in 2014. Yet slack in both product and labour markets will increase, pushing inflation below 2% in 2014. The current account deficit should stabilise above 3% of GDP in 2014.

A large, but necessary, fiscal consolidation, continued bank deleveraging and weak external demand are projected to leave the economy in recession for some time. Inflation is set to fall to a very low level as economic slack increases. As global conditions improve and exports pick up, growth is projected to turn positive by the end of 2013, although unemployment will remain at very high levels for longer. Improvements in competitiveness are projected to eliminate the current account deficit by the end of the projection period.

Economic growth, mainly driven by exports in the automotive sector, slowed in the second half of 2012, but was still among the strongest in the OECD area. The economy is projected to pick up slowly through 2013 and grow by about 3½ per cent in 2014 on the back of stronger world trade. Private consumption is likely to remain subdued due to the weak labour market and significant fiscal consolidation.

Economic activity is projected to contract further in 2013, driven by rapid fiscal consolidation and ongoing deleveraging in the financial and corporate sectors. Growth is projected to turn positive again in 2014. Unemployment is unlikely to level off until the end of 2013, and the large degree of economic slack should keep inflationary pressures contained.

The recession is projected to intensify with the economy contracting again in 2013. Growth is projected to return in 2014. Jobs will continue to be shed and the unemployment rate could rise to over 26%. Significant fiscal consolidation, weaker demand from trading partners and difficult financial conditions will take their toll. Inflation is expected to remain subdued after a VAT-related spike in prices. Notwithstanding ongoing underlying consolidation, the fiscal deficit is projected to fall only gradually owing to weak economic growth.

The economy lost momentum this year, reflecting the uncertain external environment and weakening household confidence as unemployment increased and house prices fell. From mid-2013, however, growth is projected to pick up to beyond its potential rate. The unemployment rate is projected to begin to fall, although remaining spare capacity should keep inflation at low rates.

Growth has slowed in 2012 due to export weakness, although most domestic demand components remain fairly robust. The slowdown is projected to continue into 2013, but activity should then gradually recover as export markets expand. Uncertainty about euro-area developments is high, posing a threat to financial stability.

Growth has slowed markedly since mid-2011, with a deceleration in domestic demand only partly offset by surging exports. As a result, the large current account deficit has begun to narrow. However, the competitiveness gains, mainly stemming from the nominal exchange rate depreciation in 2011, have since largely been eroded, not least by persistently high inflation. Growth is projected to regain momentum on the back of recovering domestic demand, rising to around 4% in 2013 and exceeding 5% in 2014. Inflation and the current account deficit are projected to remain well above comfort levels.