With a milder contraction than initially feared, GDP is set to fall by 4.7% in 2020, before rebounding by 3.4% in 2021 and 3.3% in 2022. Consumption is expected to strengthen as households regain confidence and draw down large savings set aside at the peak of the pandemic. Investment will also regain momentum on the back of improved expectations for industrial production, exports and the services sector. Inflation will remain subdued in 2021 before stabilising somewhat above 2%.
The various employment support measures put in place have helped to cushion the hit to the labour market, but unemployment is expected to remain well above its pre-crisis level in the next two years. As a result, the large group of low-skilled workers recently integrated in the labour market may have difficulties finding new jobs. Interventions should be maintained as long as unemployment remains high, while training and active labour market policies should be strengthened to avoid losing the social benefits of reforms made in recent years.