February 27, 2021

The EC raises the growth forecast of Spain two tenths, up to 2.3%

The European Commission (EC) raised Wednesday two tenths the growth forecast of Spain during 2019, up to 2.3%, compared to the 2.1% that had been anticipated in May, according to its macroeconomic summer estimates published today.

However, by 2020 it maintained that the Spanish Gross Domestic Product (GDP) will grow by 1.9%, as Brussels had already announced in its spring forecasts, two months ago.

In both years, the percentages will exceed the average for the euro area (1.2% in 2019 and 1.4% in 2020) and for the European Union as a whole (1.4% and 1.6%).

The data of the Community Executive go in line with those of the Spanish Government (growth of 2.2% in 2019 and 1.9% in 2020) and with which the Bank of Spain published in June (2.4% in 2019 and 1.9% in 2020).

The Community Executive highlighted that during the first quarter of 2019 the increase in GDP was higher than expected and reached 0.7% due to the contributions of net exports, while imports contracted slightly.

Domestically, the "dynamic" investment in equipment and housing offset "the weak growth in consumption".

For the second quarter of the year, the EC expects a deceleration that will lead to GDP growth of 0.6%, a higher percentage, in any case, than that expected in May from Brussels and which the Community Executive justifies by the recovery of "certain momentum" "in consumption.

Between July and September, the GDP increase is expected to fall back to 0.5% and remain at that rate for the remaining quarters of 2019 and 2020.

The Commission advanced that domestic demand and, in particular, consumption, will continue to be the main drivers of growth, while the contribution of exports will be neutral.

"In a context of global trade tensions, exports and imports from Spain are still expected to recover, but less than anticipated in the spring," the EC said.

In addition, he indicated that employment growth will slow down in 2019 and 2020, but that it will continue to "expand robustly", which will allow the unemployment rate to continue falling, the Commission said.

This, together with the increase in salaries, "should support the growth of disposable income and a higher rate of savings for households," according to the EU Executive.

Regarding inflation, after reaching 1.7% in 2018, the EC estimated that it will fall to 0.9% this year, mainly due to the effects of lower oil prices, but said it will increase to 1.2% in 2020.

(tagsToTranslate) CE (t) forecast (t) growth (t) Spain (t) decimas

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