IBERSOL | Annual Report 2021

Economic Framework Situation in Portugal Following an historic drop in GDP in 2020 (-8.4%), in 2021 the Portu- guese economy continued the recovery trajectory that it had begun in the third quarter of 2020, drawing close to pre-pandemic levels. Recent figures from the Bank of Portugal point to a 4.9% increase of GDP in 2021, with forecasts for similar growth in 2022 and a reduction in the following years (2.9% in 2023 and 2.0% in 2024), a downward revision, due to the impact of the Russian invasion of Ukraine. After a chain reduction in the first quarter of 2021, GDP more than re- covered in the second, and continued to grow in the following quarters, although at a lower rate, reflecting the fact that the pandemic was un- der control, as well as advances in vaccination coverage. The expansion of economic activity translated into increased job rates and a reduction of unemployment. Inflation increased to 0.9% in 2021 (-0.1% in 2020), with a forecast of sig- nificant growth in 2022 (4%) and a drop to 1.6% in 2023 and 2024. The rise in inflation in 2022 is linked to increases in prices of raw materials, in the fields of energy, and persistent constraints on global supply chains. The forecasted economic activity will benefit from greater influx of Eu- ropean Union funds and prolonged favourable financial conditions, even though the market is expecting a gradual increase in interest rates. In June, 2021, the European Commission approved Portugal’s Resilience and Recovery Plan, a temporary recovery tool worth over 800 billion euros and aimed at helping repair the economic and social damage caused by the Coronavirus pandemic, to make post-Covid-19 Europe greener, more digital, more resilient, and better prepared for current and future challenges. Situation in Spain Recent figures from the Bank of Spain indicate that the Spanish econ- omy contracted more sharply than the main eurozone economies in the first semester of 2020 and, since then, it has also proved slower at recovering. Among the demand components that help to explain this more negative relative performance, private consumption and, above all, tourism exports, which in the case of the Spanish economy has seen 12