The near-term growth momentum remains strong, supported by accommodative monetary and fiscal policies and sizable EU transfers. The economy is operating above potential, with the unemployment rate at a historical low. But long-term growth will be more subdued, unless adverse demographics and structural constraints on investment and total factor productivity (TFP) growth are addressed. Some recent policies, notably the reversal of the 2013 retirement age increase, will likely exacerbate the decline in the working-age population and require additional fiscal consolidation efforts. While the external environment has improved, both global and domestic policy uncertainties continue to weigh on sentiment.