Brussels revises Spain’s growth forecast up two tenths this year

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The European Commission predicts a very difficult end of winter, but begins to see “the light at the end of the tunnel”. This is reflected in the Winter Macroeconomic Forecasts, one of the four forecasting exercises carried out each year and in which, despite the third wave, the vaccine problems and the prolongation of the confinements, a hint of optimism is perceived. The analyzes, from Brussels to Frankfurt, paint a tough first semester, with the risk of a new recession, but they put faith in the second half, when the effect of mass vaccination begins to be felt. To the point that in 2022 the EU will return to the levels it had before the pandemic.

The department run by the Italian Paolo Gentiloni has raised this Thursday by two tenths the growth forecast for Spain in 2021, passing 5.4 to 5.6%. At the end of last year the Commission had lowered it to 5.4%, and in Madrid there were regrets because, they assured the Government, the latest available data had not been taken into account and that they showed a more positive trend. Now, in February, the technicians correct upwards. Also for 2022, with an improved growth forecast to 5.3%. The numbers are still far from the 7% that the Spanish Government still foresees, but they do not take into account the real effect that the injection of community funds contemplated in the Recovery Plan of up to 750,000 million euros approved by the leaders of the all 27. “There is not enough data” yet to evaluate this effect, the commissioner explained, as the official reform plans have not been presented and the money will not begin to circulate until after the summer.

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The Spanish data are well above the estimates for the Eurozone (3.8% in both years, four tenths less than predicted in autumn) and the total for the Union (3.7% now and 3.9% next year). But they are not ‘enough’ to offset the drop in 2020, whose 11% for our country was by far the steepest in the entire EU, ahead of Greece (-10%), Malta (9%) or Italy (8.8%), the rest of the Mediterranean and tourist countries. The area’s average contraction in 2020 was ‘just’ 6.8% of GDP last year, with the Baltic countries hardly affected and Ireland, defying all models, growing a very solid 3%.

“Today’s forecasts offer hope at a time of great uncertainty for all of us. The strong recovery in growth expected in the second half of this year shows very clearly that we are turning the corner to overcome this crisis. A European response. Firm will be critical to tackling issues like job losses, a weakened business sector and rising inequalities.We will still have a lot to do to contain the broader socio-economic consequences.Our recovery package, aided by vaccination and a recovery in global demand will go a long way to supporting the recovery, “said the Community Vice President Valdis Dombrovskis.

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The analysis of the Commission’s specialists is the same as they have been doing for the last few months. “GDP growth in Spain rebounded strongly in the third quarter of 2020, after an unprecedented contraction in the first half of the year. The recovery was driven mainly by domestic demand, with a strong increase in both private consumption like investment. Net exports also made a positive contribution to GDP growth. ”

The document points to the confinement measures that were reactivated after the summer to contain the increase in infection rates in several CCAA, but highlights that they have been applied and noticed “in a less severe way than in other large European countries” . Commissioner Gentiloni, in his speech to the media, has in fact pointed out that they expect the confinement measures to be “marginal at the end of 2021″and there are hardly any residual and very specific elements left in 2022.

However, the Commission predicts that the recovery in tourism, unfortunately, will not be strong enough in 2021 to reverse the observed trends. “A smooth recovery in international tourism should see exports grow faster than imports and generate a positive contribution to net export growth in 2021. Overall, GDP is forecast to grow 5.6 % in 2021. In 2022, the recovery in tourism is expected to pick up momentum, with most of the impediments to activity removed entirely. This would lead to a still robust growth rate of 5.3%, “says the report about our country.

The Commission highlights that the measures to sustain employment are being noticed and will continue to be noticed in the coming months, but warns that the insolvency proceedings they are one of the great risks facing this exercise. “Measures to protect and provide liquidity will continue to help mitigate the loss of jobs and cushion the damage of the crisis to productive capacity. A downside risk, however, is that of an increase. of business insolvencies, concentrated mainly in the sectors most affected by activity restrictions, which materialize as support measures are reduced. This could generate an increase in unemployment and reduce productive capacity “, they point out from Brussels.

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