The year 2021
GDP growth firmed up again in 2021, after a 6.5% contraction in 2020. The growth phase began in Q2, and GDP growth for the year is estimated at 4.1%.
The main driver of growth has been the surge in domestic demand, which in turn stems from strong growth in private consumption and corporate and public investment. Households and businesses benefited from, among other things, Government and Central Bank’s pandemic response measures, improvements in the employment situation in labour-intensive sectors, and strong private sector balance sheets at the beginning of the pandemic.
Private consumption is estimated to have grown by more than 5% in 2021. Consumption has increasingly shifted out of the local economy, including overseas travel and major consumer goods such as motor vehicles. Households have been buoyed up by a number of factors: rising real wages (despite high inflation), declining unemployment, favourable interest rates, rising asset prices, and accumulated savings.
Total investment looks set to have grown by almost 12% during the year, driven mainly by business investment; however, public investment has steadily gained momentum since the Government launched its investment initiative. Residential investment contracted in 2021, however.