The recovery of economic activity has been swift and growth will reach 8.5% this year and 5.8% in 2022, assuming that the sanitary situation remains under control. Investment will remain a key engine of growth, while consumption will recover only gradually. Robust export demand will keep industry capacity utilisation high. The low import content of consumption means that the surge of imported raw material prices will only have a limited impact on consumer price inflation.
After having provided strong stimulus to credit extension in 2020, monetary policy is assumed to turn more neutral as the recovery firms. Fiscal policy will provide less support than in 2020 as the recovery is solid in most sectors. However, some support measures will remain in place. Corporate deleveraging and, in particular, addressing local-level debt with potential contingent liabilities for local governments are priorities. Social protection should be strengthened to boost consumption in a sustainable way, and restart the rebalancing process from investment to consumption. Infrastructure investment should prioritise projects contributing to decarbonisation, such as investment in renewable energy.