Economic growth is projected to slow from 3.5% in 2021 and 2.9% in 2022 to a more sustainable rate of 1.5% by 2023. Private consumption expenditure will slow as support from a declining saving rate diminishes and government expenditure will fall as COVID-19-related support terminates. The unemployment rate will fall below the pre-COVID-19 rate by 2022, but the inflation rate will remain considerably higher. The main downside risk to the outlook is that vaccination rates, booster shots for vulnerable groups and intensive-care-unit capacity do not turn out to be sufficient to avoid future containment measures.
The pandemic laid bare pre-existing gaps in social safety net coverage. Improving the design and efficiency of unemployment benefits and more generally of public services in health, social care and childcare would boost growth and make it more resilient.
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2021 Structural Reform Priorities