Economic activity is projected to rebound by 5.8% in 2021 and 4.0% in 2022. After a weak first half of 2021, activity will strengthen as the vaccine rollout accelerates and sanitary restrictions are lifted. In addition, the drawing down of the high level of saving due to the sanitary restrictions will boost consumption as pent-up demand is satisfied. Faster global growth will raise export prospects. Improving global demand, accommodative financing conditions and government capital spending in line with the recovery plan will support investment. Still, employment will recover slowly, as the participation in the job retention schemes will decline.
A slow and uneven recovery risks entrenching the initial negative distributional consequences of the COVID-19 crisis and widening inequalities of opportunities. The EUR 100 billion recovery plan targeting investment in skills and green technologies provides an opportunity to respond to some of the country’s longstanding challenges.
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2021 Structural Reform Priorities