After a relatively mild contraction in 2020, the economy is projected to expand by 4.8% in 2021 and by 2.8% in 2022. The recovery of domestic demand will gather pace on the back of the gradual strengthening of private consumption and investment. The unemployment rate is expected to peak in the third quarter of 2021 at around 6.6%, as short-time work schemes are terminated, and to decline to 6.1% at the end of 2022. Downside risks to the projection include worse-than-expected epidemiological developments that may delay the full phase-out of containment measures, and a persistent labour market weakness. On the upside, an earlier completion of the vaccination campaign could ensure faster control of the pandemic, leading to a stronger rebound in private consumption and investment.
The recovery after the COVID-19 crisis requires a prompt labour market rebound and addressing skill shortages that weighed on firm growth and innovation prior to the crisis. Sustainable public infrastructure investment can improve environmental outcomes. Improving housing affordability and labour market participation of women will render the recovery more inclusive.
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2021 Structural Reform Priorities