Real GDP is projected to increase by 3.2% in 2021 and 2.9% in 2022, supported by the easing of containment measures and stronger sentiment amid the subsiding pandemic. Improving labour market prospects and the progressive reduction of currently high saving will underpin consumption growth. Investment should rebound on the back of reduced uncertainty. With the recovery progressing, deflation pressures will fade, but inflation should remain well within the target range.
The government moved swiftly to support employment and incomes during the downturn. The fiscal stance is expected to remain adequately supportive in 2021. Fiscal measures should become better targeted to support viable jobs and companies. Structural reforms should be accelerated, including ones to strengthen the business environment and remove internal barriers to competition. With low inflation expectations and still high uncertainty, monetary policy should remain accommodative.