Jersey's Fiscal Policy Panel (FPP) has published its updated forecast for the Jersey economy.
The Panel's economic growth forecast has been revised upward. It now expects the economy to grow by 2.2% this year, with growth further accelerating to 2.8% in 2022 and 3.3% in 2023.
However, this follows an expected fall of more than 9% in 2020, the sharpest economic contraction on record.
The Panel's letter to the Minister for Treasury and Resources explains that the pace of vaccination means there is "cautious optimism" that Covid-related disruptions to the economy will begin to ease.
The latest economic data suggests a faster than expected recovery, with unemployment continuing to fall and business sentiment improving.
However, a large element of the contraction in gross value added is due to the impact of low interest rates on the profitability of Jersey's banking sector.
As interest rates are expected to grow very gradually, Jersey's economic output is not expected to return to pre-pandemic levels in the near future.
Inflation forecast
The Panel has also updated its inflation forecast and expects a temporary period of high inflation to gradually fall back over the course of 2022.
High inflation is common to a number of industrialised economies at the moment, including the UK.
The Panel's letter advises government to aim for public finances to be broadly in balance by 2024, and that no new fiscal stimulus should now be introduced. However, it recommends retaining flexibility to respond if economic conditions change.
• The FPP's letter can be viewed here