In the mid-term, growth rates will exceed 5 percent, unemployment rate will drop to 8.6 percent, wages will rise at an average rate of about 4 percent, investments are set to rise up to 36.2 percent, while exports at an average rate of 8.8 percent, shows the Fiscal Strategy 2022-2024 with prospects up to 2026, which the Government adopted at Tuesday’s session.
Economic growth in 2021 is projected at 4.1 percent, with an annual growth of 5.4 percent in period 2022-2026. The basic mid-term scenario is based on the standpoint that the economy will recover in 2021, followed by intensive growth. State support will continue in 2021, focusing on assistance to the national economy in its faster recovery and laying the foundations for higher long-term economic growth. Global supply chains are expected to gradually stabilize, accompanied by growth in foreign demand, which alongside the lessening of the global pressure of the pandemic, is expected to have a favorable impact on domestic economic trends – trade exchange, investments and consumption. Favorable international surrounding and mass immunization in the country are expected to have a positive effect on the expectations and confidence of domestic entities and the inclination for investments and consumption, the Ministry of Finance said in a press release.
It adds that investments will play a significant role in the economic recovery and its gradual intensification.
The real growth of gross-investments is projected at 8 percent in 2021, rising to an average annual growth of 8.8 percent in period 2022-2026. The rise in investments is based on the expected growth of private investments, more intensive influx of foreign investments, expected fiscal stimulus that will be channeled through increased capital expenditures, but also rising support for the development of the private sector and strengthening of competitiveness, support to innovations and technology development of enterprises.
The export of commodities and services is projected to register a real growth of 10.6 percent in 2021 as the adverse economic effects of the pandemic are exhausted, global production chains and foreign demand recover, accompanied by higher use of the country’s production capacities. In the mid-term, exports are expected to strongly contribute to the economic growth, with a projected average real annual growth of 8.8 percent in period 2022-2026.
According to the basic macroeconomic scenario, 2021 is expected to see a rise in the number of employed by 1 percent, followed by a projected average growth of employability of 3.6 percent in period 2022-2026. This is expected to reflect on the labor offer, which is projected to annually increase by 1.7 percent. These trends on the labor market will contribute to a drop of the average unemployment rate to 8.6 percent by 2026 and a rise in the employment rate to 54.3 percent. In addition, the rise of the average net wage is expected at 3.8 percent per year, with prospects for moderate growth intensification in parallel with productivity.
The commitment for gradual fiscal consolidation remains a priority, a gradual reduction of the budget deficit is projected by 2026 (4.3 percent in 2022, 3.5 percent in 2023, 2.9 percent in 2024, 2.5 percent in 2025 and 2.2 percent in 2026). The primary budget deficit will also decrease from 3 percent of the GDP in 2022 to 1.2 percent in 2026, reads the press release.