Page 13 - economic report 2021

resulted in the US unemployment rate falling to The Eurozone suf ered the ef ects of the
5.4% in 2021, helping to increase inflationary pandemic more than the USA.
pressure due to the rising trend in wages (5.6%).
The strong economic incentives received by
businesses and citizens to contain the economic effects of the restrictions, along with falling tax
revenue, put the public deficit in 2020 at 15.8% of GDP and, according to the OECD, this only
shrank to 11.8% in 2021, largely due to the effect of rising GDP on the ratio.

The European economies that The Eurozone economy was one of the world
contracted most in 2020 were regions most affected by the pandemic, with
also those that grew most in 2021. GDP contraction of 6.4% in 2020 and 5.3%
growth in 2021. Despite the fact that all the
Eurozone countries recorded a positive trend in
2021, generally speaking the countries that initially suffered most from the impact of COVID-19
were also the ones to grow most strongly in 2021. This can partly be explained by the statistical
effect of the fall in the previous year, and also because the economies with larger service sectors
benefited most from the gradual withdrawal of restrictions as the health situation improved. In
particular, according to Eurostat, growth in 2021 was especially strong in Greece (8.3%), France
(6.8%) and Italy (6.6%), a clearly greater improvement than in Germany (2.9%) or Slovakia (3.0%),
which are economies with larger industrial sectors. Spain was somewhere in between, with a 5.1%
increase in economic activity in 2021, due to the delay in restoring international tourism on which it
depends heavily. Outside the Eurozone, the United Kingdom saw high growth (7.4%) but this did not
enable it to regain the ground lost in 2020 (-9.3%). In the case of the United Kingdom, the extensive
spread of the virus among the population, which required implementation of very restrictive social
distancing measures for long periods of time, was added to the impact of Brexit, signed on 24 11
December 2020 but with the trade agreement coming into force on 01 January 2021.

The European labour market was also affected by the pandemic, but less so than in other crises
thanks to the support measures to protect jobs that were adopted by most economies (financed
by the SURE programme). For this reason, the
Eurozone unemployment rate only rose four
GDP GROWTH IN EUROZONE tenths in 2020, to 8%, and fell back in 2021 to
COUNTRIES. 2021 Chart 1.3 7.7%, a very similar figure to 2019, when the
Annual variation rates, as %
lowest figure in the last decade was reached.

Inf at on rebounded due to rising prices
for energy and other commodit es.

Inflation rates bounced back notably in 2021.
The main factor behind this rebound was the
increase in energy prices, although rising prices
in other commodities also contributed, such as The external environment of the Andorran economy | I. The international economy
basic foodstuffs (cereals, oils, meat, etc.) and
metals (iron, copper, aluminium, nickel, etc.).
Another factor that explains the strong rebound
in inflation was the negative base effect,
because it is compared with the fall in prices
that occurred in 2020 due to the economic
slowdown at the start of the pandemic. On
annual average, Eurozone inflation was 2.6% in
Source: Eurostat.
2021, compared with 0.3% in the previous year.