After a deep recession in 2020, economic activity has rebounded. However, supply disruptions and a low vaccination rate are making the future pace of the recovery more uncertain. An ambitious recovery plan and substantial inflows of EU funds provide a unique opportunity to strengthen the economy, but effective and timely implementation will require continued efforts to improve public procurement and public investment management. In the medium-term, rapid population ageing will exacerbate fiscal challenges and weigh on long-term growth. To prepare for an ageing society, pension, health and long-term care, and labour market reforms are needed to extend working lives, improve the health of the ageing population, and enhance the efficiency of public spending. At the same time, population ageing reinforces the need to boost productivity. To reinvigorate the economic convergence process and make growth more inclusive and sustainable, policies to promote adequate skills, foster domestic innovation capacity, and better price environmentally harmful activities are needed.

SPECIAL FEATURE: ADDRESSING THE CHALLENGES FROM POPULATION AGEING