The COVID-19 pandemic interrupted the strong economic growth performance in 2016-19, which entailed large increases in employment and real incomes, and the lowest unemployment rate in thirty years. The swift vaccination rollout allows a faster recovery from the pandemic from mid-2021 onwards.

After a strong demand-based recovery following the COVID-19 pandemic, economic activity declined amid high inflation. Growth has restarted in mid-2023 and inflation is receding, but fiscal and monetary policies need to work hand-in-hand to fight remaining inflationary pressures and recreate fiscal space to finance future spending needs.

The European recovery has been disrupted since the onset of Russia’s war of aggression against Ukraine. Co-ordinated and timely policy action helped avoid a severe downturn, but the near-term outlook is clouded by uncertainty and downside risks. Monetary and fiscal policy need to become sufficiently restrictive to reduce underlying inflationary pressures durably.

The COVID-19 outbreak abruptly stopped several years of robust economic growth in Bulgaria. Public finances are sound and the government took rapid action to support firms and households. Coping with the pandemic and strengthening the recovery will require continued fiscal support, public investment and the advancement of priority reforms.

Lithuania’s economy exited the COVID-19-crisis successfully and was growing fast until early 2022, buoyed by rising exports and rapid integration into global value chains. However, with Russia’s aggression of Ukraine continuing and its consequences spreading, the outlook has darkened.

Slovenia’s strong post-pandemic recovery has been hit by strong headwinds from the war in Ukraine, higher energy prices, and supply chain bottlenecks. At the same time, the strong labour market performance has led to historically high employment, low unemployment and widespread labour shortages.

The COVID-19 pandemic plunged the EU into its worst-ever recession and risks increasing inequalities, notably between regions. Thanks to a bold and innovative policy response, including a common instrument to finance national recovery plans (Next Generation EU), growth is rebounding, but ambitious reforms will be essential to heal the scars of the pandemic and succeed in the green and digital transitions.

The prospering economy has boosted employment and reduced unemployment to historical low levels. The risk of overheating is increasing with double digit growth in wages and higher consumer price inflation, although it remains within the central bank’s tolerance band.

Growth has rebounded from the pandemic and the energy crisis, despite the 2023 earthquake and droughts. Morocco has benefitted from a stable macroeconomic regime and the deficit is narrowing following the pandemic and energy crisis with the government debt ratio is around 70% of GDP. Morocco has embarked on major reforms to encourage investment and to extend health insurance and social protection, but a stronger convergence path will be needed to achieve the vision in the New Development Model. Morocco’s labour productivity gap with the frontier remains large, although it has narrowed. FDI flows have been strong, but domestic private investment is low, and Moroccan firms face obstacles in performing better. Morocco’s young population is an asset, but the labour market suffers from high youth unemployment and low female employment. Emigration is significant. Widespread informality leads to low wages, poor-quality jobs and weak skills. Morocco has made an ambitious commitment to reduce carbon emissions by 45% by 2030 compared to 2010 and to net zero by 2050, benefiting from the country’s potential for renewables-based generation. The country is vulnerable to climate change and already faces significant water stress. SPECIAL FEATURES: BOOSTING INVESTMENT, FIRM PERFORMANCE AND PRODUCTIVITY; CREATING MORE AND BETTER JOBS

Viet Nam has made remarkable economic progress over the past decades, sustaining high economic growth. The economy has also proven resilient to shocks, including the COVID-19 pandemic.