Page 11 - economic report 2021

The external environment of

the Andorran economy

I. The international economy

1. The main features of economic development in 2021

After a historic fall of 3.1% in global economic In 2021, the global economy
activity due to the impact of the pandemic recovered from the fall in GDP
caused by the virus SARS-CoV-2 (COVID-19),
the economy began a process of recovery in caused by the pandemic.
2021 that was also strong, with GDP growth of
6.1%, the highest recorded figure in decades. This strong momentum enabled the world economy
to easily recover pre-pandemic GDP levels. The recovery in economic activity in 2021 was also
helped by the lower mortality rate of the new variants of the virus thanks to the vaccination
process; restored confidence of private stakeholders due to the improving health situation; the
extension of favourable financial conditions and continuing measures to support growth and
workers’ income.

In the last part of the year, the Nevertheless, this improvement in global activity 9
supply crisis and climbing inf at on and world trade suffered a certain loss of impetus
lowered growth prospects. in the last part of the year. This was provoked by
outbreaks of new variants of the virus in some
geographical areas and the appearance of two
phenomena that arose from reopening the economies after the pandemic: tensions in the global
supply chains and rising energy prices.

In 2021, many of the economic policy measures adopted by governments and economic
institutions to tackle the impact of the pandemic were still in place, which made a positive
contribution to rapid recovery in economic activity. Within Europe, note first the actions by the
ECB, which enabled states to finance increased public spending without increasing the cost of
the debt. Secondly, the European Commission
extended the temporary easing of the fiscal Maintaining measures to tackle
rules of the EU Stability and Growth Pact in COVID-19 in 2021 helped the recovery.
2021, enabling member states to take on debt
without restrictions. Moreover, the European
Commission granted the first Next Generation EU packages to member states, with a fund of
1
€806,900 million for the period 2021-2027, representing the first European fiscal instrument The external environment of the Andorran economy | I. The international economy
financed by a joint EU debt issue. The goal of this fund is to promote environmental sustainability
and the digital transformation and mitigate the economic and social impacts of the pandemic.
Added to these European measures were all those adopted by the governments of advanced
economies, which were maintained in 2021, with a special focus on guaranteeing business liquidity
and maintaining workers’ and businesses’ incomes.

1 Total at current prices (€750,000M at 2018 prices). The most important part of this package is the Recovery and Resilience
Facility, with a budget of €723,800M (at current prices). Of the total amount, €338,000M will be non-returnable transfers and
€385,800M will be loans.