The economy has rebounded strongly since the second half of 2020, but social unrest and renewed mobility restrictions in April and May 2021 will push a more durable recovery into the second half of 2021. GDP is projected to grow by 7.6% in 2021 and then ease to 3.5% in 2022, boosted by private consumption and investment. A vaccine rollout is slowly making progress. Possible further restrictions, and also uncertainty about fiscal prospects, could weaken the recovery.
A significant fiscal response will appropriately continue to support the economy in 2021. The public finances could be strengthened in a progressive way once the recovery strengthens. Social protection and labour market policies need ambitious reforms to strengthen formal job creation for a more inclusive recovery and would benefit from additional resources. Ample monetary policy support will rightly continue during 2021 and 2022.