May 2021 GDP Forecast | Tourism decline was main driver of 2020 negative growth. Will it drive the recovery in 2021?
24 May 2021

ISET-PI has updated its real GDP growth forecast for the second and third quarters of 2021. Here are the highlights of this month’s release:

Geostat has released its GDP growth estimate for the first quarter of 2021. The Q1 growth stands at -4.2%, which is 1.2 percentage points above the recent ISET-PI forecast.

ISET-PI’s forecast of real GDP growth for the second quarter of 2021 stands at 12.2% -up from 11% in April. The third-quarter growth forecast currently stands at 3.3%.

Notably, our econometric model depends only on the retrospective information (past observations), thus, an abnormally large negative growth of the real GDP during the second wave of strict government restrictions causes overestimation of the contraction in the first quarter and growth in the second quarter of 2021.

Consequently, the annual growth in 2021, from March data, is expected to be 3.9% in the worst-case scenario, and 4.3% in the best-case or an average long-term growth scenario. Our middle-of-the-road scenario (based on the average growth in the last four quarters) predicts a 4% increase in real GDP.