Following a decline of 2.7% in 2020, GDP is projected to recover by 3.7% in 2021 and to grow by 4.7% in 2022. The resurgence of new infections since the beginning of the year will continue to weigh on economic activity. Nonetheless, widespread vaccination and easing of containment measures by the second half of the year should support a strong rebound in consumption and, to a lesser extent, investment. Inflation is set to ease due to continued, though diminishing, spare capacity. The outlook, however, remains uncertain amid epidemiological risks and logistical hurdles for vaccination deployment.
Policy continues to be supportive. Fiscal support has been continued, albeit in a more targeted way, and monetary policy has remained accommodative. This stance should continue until the recovery is well established. Structural policies that support investment in better infrastructure and sustainable energy, as well as improving workers’ skills, should help strengthen the recovery and medium-term growth and facilitate the transition to a greener economy.