The Fiscal Authority improves the deficit forecast but lowers GDP growth for 2021 and 2022

The Independent Authority for Fiscal Responsibility (AiReF) published this Monday an update of the forecasts for the Spanish economy. The body directed by Cristina Herrero has cut its growth forecast by four tenths for both the end of last year and for this year. In this way, the economy would have grown by 5.1% in 2021 and would drop to 5.9% in 2022. The Government had planned a growth of 5.5% for last year and 6.3% for this .

The agency indicates that it has updated these forecasts as a result of the advanced data on the fourth quarter, whose growth would have been lower than expected. This has occurred, he points out, due to the impact of the outbreak of the pandemic in December, the supply crisis or the delay in the effects of the Recovery Plan on the economy. The AiReF considers that the recovery of GDP to pre-pandemic levels will not take place until the last quarter of this year.

On the contrary, the agency makes an upward revision in the forecasts of employment growth, which will have grown by 6% in 2021 and will increase another 2.8% in 2022. It also improves the forecast of the government deficit for the year 2021 in three tenths, up to 7%. They are 1.4 points less than what is foreseen in the Government's Budget Plan. This is due to the lower aid to companies and the improvement in income. Regarding the distribution by subsectors of the deficit, the review focuses on the Central Administration, which went from 6.2% to 5.9% and the deficit of the Social Security Funds remains at 1.3%, that of CCAA in 0.2% and the surplus of the local subsector in 0.3%.


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