The European Commission (EC) on Thursday raised its projection of growth of the Spanish economy by one tenth for both 2020 and 2021, to 1.6% and 1.5%, respectively, because it expects a slight improvement in private consumption and the investment.
In its winter macroeconomic forecasts, the Community Executive has also revised its growth estimate of the Spanish Gross Domestic Product (GDP) for 2019 by up to 2%.
After this update, the Brussels 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.
In its analysis of the Spanish economy, the Commission notes that the slowdown in growth in the second half of 2019 was smoother than expected due to a “small recovery in private consumption”, which has led to the upward revision for the year past.
The results of the second half of the year also indicate that domestic demand (consumption and investment) will be “more resilient” for the future, which justifies a “slightly more positive forecast” for 2020 and 2021 than anticipated by the Executive community in its forecasts for November, notes the report.
“Private consumption should be supported by increases in real disposable income and a more moderate increase in the household savings rate,” says the Commission, which also expects the investment “to recover on the horizon of forecasts after a weak end of 2019 “.
The contribution of exports to growth, meanwhile, “would decrease in 2020 and would become neutral in general in 2021.”
These factors are what have led the Community Executive to review a tenth upward forecast for this year, to 1.6%, and for the next, to 1.5%.
The Spanish economy would thus grow above the Eurozone average, whose rate would stagnate at 1.2% in 2020 and 2021, and the European Union, where the increase would be 1.4% in both cases.
On the other hand, the Community Executive expects inflation in Spain to increase to 1.2% in 2020, after standing at 0.8% in 2019 – one tenth less than projected last fall – and reaching 1, 3% in 2021.
The Commission’s macroeconomic winter forecasts only update its GDP and inflation estimates, which will not be until spring when it offers new projections of deficit, debt or unemployment.
Brussels is still waiting for Spain, already with a full-fledged Executive, to send it its 2020 Budget draft to evaluate it. However, the Government still does not know when to present the accounts, although it wants to have them approved before the end of the summer.