After a strong recovery at the end of 2020, the reintroduction of sanitary measures in early 2021 has dented near-term economic prospects. Even so, GDP is projected to expand by 2.6% in 2021 and 2% in 2022, supported by the strong recovery of the global economy and government spending. The new sanitary measures were more targeted than previously, with a smaller negative effect on consumption. As restrictions are lifted, and with government support, consumption is expected to recover. Still, subdued wage and employment growth will limit the pick-up in consumption, but stronger external demand will boost exports and support stronger investment.
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