These risks could be exacerbated by elevated levels of private indebtedness, but the authorities
have ample policy and response space.
The economic restructuring underway aims at reducing reliance on foreign workers and is
expected to ultimately raise capital-labor ratios and productivity growth but is subject to
transition costs. The current account is expected to moderate over the medium term with the
drawdown of accumulated pension savings in response to aging. Additional government
spending to strengthen health care and other infrastructure and make the distribution of
consumption more even within and across generations is also expected to contribute to the easing
of the current account surplus going forward.