The European Commission has improved by one tenth its estimates of economic growth for Spain for the next two years, to 1.6% in 2020 and 1.5% in 2021 (1.5%). In their analysis of winter economic forecasts, they argue that this upward revision is due to the fact that “the expected slowdown of the Spanish economy in the second half of 2019 was lighter than expected, due to a small recovery in private consumption”. Thus, the quarterly growth of Spain’s GDP was 0.4% in the third quarter and 0.5% in the last quarter, one and two tenths more than projected in the autumn forecasts. The Commission points out several reasons why it improves its forecasts, including that private consumption should be sustained by the increase in real disposable income and by the moderation in the household savings rate. In addition, he hopes “that the investment will recover the forecast horizon after a weak end of 2019, in line with the final demand.”
Also, in its macroeconomic forecasts, the Community Executive has also revised up one tenth upward its estimate of growth of the Spanish Gross Domestic Product (GDP) for the end of 2019, up to 2%, one tenth more than what the past had calculated November. With this update, Brussels’s growth projections for these three years coincide with those contained in the new macroeconomic chart of the Spanish Government, presented last Tuesday after approving the budget stability path and the expenditure ceiling that will serve as a basis for the Budgets Generals of the State of 2020.
Among its conclusions, the European Commission anticipates that the contribution of the foreign sector will decrease throughout this year and will be “generally neutral” in 2021, as export growth slows down and imports “accelerate”. With regard to inflation, the economic services of the Community Executive estimate that it closed in 2019 at 0.8%, one tenth less than expected a few months ago, and will grow to 1.2% this year and 1.3% in 2021, because the evolution of the price of oil will be offset by a gradual increase in core inflation.
As for the forecast for the eurozone, the EC places it at 1.2% for the next two years, while for the European Union as a whole it will be 1.4%. “The outlook for Europe’s economy is stable, but discreet, growth over the next two years,” said European Economy Commissioner Paolo Gentiloni in a statement, who said that with these estimates the eurozone “will extend the period long expansion since the launch of the euro in 1999. ” This report explicitly warns that the coronavirus epidemic is “a new downside risk” with its implications for public health, economic activity and trade, “especially in China.”