Brussels Upgrades its Growth Forecast for Spain to 6.2% in 2021
Spain to be the fourth fastest-growing country in the EU this year. Brussels thus raises its estimate for this year by three-tenths of a point (which was at 5.9%). However, it has lowered its estimate for the following year by five points, from 6.8% calculated in the spring to 6.3% in Wednesday’s forecasts, although it does not specify in its analysis the reason for this downward revision.
The European Commission has improved this Wednesday, July 7th, its growth forecast for Spain’s GDP in 2021 with respect to its spring estimates by raising it to 6.2%, although it contains its optimism for the following year by setting the figure at 6.3%, down from the 6.8% it estimated in May.
The Community authorities blame the restrictions against the coronavirus and the impact of the ‘Filomena’ storm for the 0.4% reduction in Spanish GDP in the first quarter of this year, but expect it to recover by 2% in the second quarter and 3.1% in the third quarter thanks to a better health situation, “rapid progress” in vaccination and the relaxation of the pandemic measures.
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Spain to be the fourth fastest-growing country in the EU this year
Brussels thus raises its estimate for this year by three-tenths of a point (which was at 5.9%). However, it has lowered its estimate for the following year by five points, from 6.8% calculated in the spring to 6.3% in Wednesday’s forecasts, although it does not specify in its analysis the reason for this downward revision.
In any case, the EU authorities expect Spain to be the fourth fastest-growing country in the bloc this year, behind only Romania, Ireland, and Hungary, although it will also be one of the countries that will take the longest to recover GDP levels prior to the crisis generated by the pandemic.
“We expect the implementation of the recovery plan to strengthen public and private investment and give a new impetus to economic recovery, especially in 2022,” said the Commissioner for Economic Affairs, Paolo Gentiloni, at a press conference in Brussels to present the data of the EU-27.
According to the forecasts, countries such as Germany and the Netherlands will manage to return to pre-crisis levels by the end of 2021 but Spain and Italy will not achieve this until a year later, in the third quarter of 2022.
As for inflation, the Commission expects inflation to stand at 2.1% in 2021 – due to higher energy prices, among others – and 1.4% the following year, in both cases below the levels forecast for the EU as a whole, 2.1% and 1.4%, respectively.
In its analysis of Spain, the community services highlight among the positive indicators that with the end of the state of alarm, the pace of job creation and the exit of workers from temporary lay-offs (ERTE) has “significantly accelerated”.
It also values the “constant improvement” of other indicators such as business and consumer confidence, which it interprets as the “consolidation” of the recovery throughout the second quarter and which it expects to continue later on.
(Featured image by jessiegarciasmith via Pixabay)
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