Real GDP is projected to grow by 1.3% in 2023 and 1.1% in 2024, mainly driven by domestic demand. Government support to help households cope with the energy price shock and increased defence spending will boost consumption and investment. Core inflation (excluding energy and food) will increase towards 2% as wage growth gains momentum and spreads to SMEs in 2024.
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The COVID-19 pandemic hit the economy hard, provoking a marked downturn. Economic activity tumbled as sanitary restrictions restrained consumption and investment. Workers and households with weaker attachment to employment tended to be most affected. However, robust government support and the reopening of the economy led to a partial bounceback. Growth is on course to regain momentum, supported by macroeconomic policies and progress in vaccination.
Mindful of the strong population ageing already underway, the COVID-19 recovery strategy needs to enhance labour force participation and spur business dynamism. Moreover, significant potential to expand use of digital technologies, in both the public and the private sector as well as education, should be seized.
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2021 Structural Reform Priorities