The Timorese economy has improved owing to high oil-financed public spending and a rebound in agriculture, non-oil growth. Despite high bank deposit growth, private sector credit has remained stagnant. The medium-term outlook for growth is positive. Timor-Leste's key challenge remains to use its petroleum wealth wisely to build a strong non-oil economy and raise living standards. Improvements in financial management and budget execution will be important. Productivity-enhancing structural reforms and efforts to build labor skills would improve competitiveness in non-oil industries and services.