After contracting sharply in 2020, GDP is projected to recover by 3.3% and 4.9% in 2021 and 2022, respectively. The Czech Republic has experienced one of the highest infection and death rates in the OECD area and progress in vaccinations has been relatively slow, delaying the relaxation of containment measures. The recovery will nevertheless gather pace in the second half of 2021, once the population is more extensively vaccinated, triggering a rebound in services and boosting private consumption and investment. Inflation has picked up due to rising food and fuel prices. It is expected to remain between 2 and 3% in the latter half of 2021 and in 2022. Unemployment will start to decline.
The recovery offers an opportunity to focus on productivity-enhancing investment and upskilling, including better targeting of R&D support and improved business environment.
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2021 Structural Reform Priorities