After a strong recovery at the end of 2020, the reintroduction of sanitary measures in early 2021 has dented near-term economic prospects. Even so, GDP is projected to expand by 2.6% in 2021 and 2% in 2022, supported by the strong recovery of the global economy and government spending. The new sanitary measures were more targeted than previously, with a smaller negative effect on consumption. As restrictions are lifted, and with government support, consumption is expected to recover. Still, subdued wage and employment growth will limit the pick-up in consumption, but stronger external demand will boost exports and support stronger investment.
Given the persistence of the pandemic, a third supplementary budget worth 3.5% of annual GDP was introduced in end-2020. The near-term priority is to enhance the medical system and to accelerate vaccinations while preparing counter-measures to prevent further shocks. The pandemic shock has highlighted the importance of structural reforms to improve working conditions and labour market flexibility and promote vocational training. In the longer term, actions to support greater digitalisation and green growth will help foster a resilient and sustainable recovery.