Economic growth is projected to pick up gradually from the second half of 2021, boosted by the progressive reopening of the border, reaching 3.5% in 2021 and 3.8% in 2022. Private consumption will remain robust, supported by the recent minimum wage increase and the wealth effect from rising house prices. Investment will expand on the back of strong house prices, record high issuance of building permits and large public infrastructure projects gaining momentum. Inflation pressure will strengthen as economic slack disappears by end-2022.
The economy recovered strongly, supported by large policy stimulus and an effective response to COVID-19, but some sectors hardest hit by border restrictions, notably tourism, lag behind. The pandemic highlighted a number of structural challenges. A key priority is to address the deteriorating access to affordable housing, which weakens financial resilience, hampers labour mobility and reduces inclusiveness.
©Shutterstock/Anton PetrusRead full country note
2021 Structural Reform Priorities