The Spanish economy is slated to grow slower than expected, according to a briefing document released by the European Commission (EC).
The EC’s Autumn 2021 Economic Forecast, available here, states that the Spanish economy is set to grow by 4.6% in 2021, after dropping 10.8% in 2020. Growth is expected to reach 5.5% in 2022 and 4.4% in 2023. Meanwhile, unemployment is predicted to barely shift from 15.5% last year to 15.2% this year, even if it is slated to go down to 14.3% in 2022.
According to the English version of Spanish newspaper El Pais, the 4.6% prediction for 2021 is a marked downgrade from the EC’s summer forecast.
Writing for El Pais, Manuel V. Gomez said: “For 2021, Spain is expected to grow 4.6%, 1.6 points below the figure predicted in the summer forecast and 1.9 points below the government’s estimate, upon which next year’s budget plans are based. In 2022, output is projected to rise 5.5%, which is also far below the summer forecast.”
The EC’s cut, said Gomez, went far deeper than the IMF’s a few weeks ago, when Spain’s anticipated GDP growth was cut to 5.7% in 2021 and 6.4% in 2022.
The consequences of this, Gomez wrote, are quite clear: “All this points to a macroeconomic scenario in which it is fairly clear that it will be nearly impossible for Spain to reach the forecasts upon which the 2022 budget was based.”
Even with the cut, the EC was cautious in its outlook.
Writing in an accompanying document, it said: “Overall, real GDP is projected to grow by 5.5% in 2022 and by 4.4% in 2023. While uncertainty has decreased significantly thanks to the control of the health situation at national level, there are still several risks to the outlook. The persistence or resurgence of the pandemic in other countries could weigh on economic growth, notably by delaying a full recovery in the tourism sector.”
It added: “Supply-side bottlenecks and energy and transport prices could delay the recovery in the short-term, while labour market mismatches could affect the implementation of green and digital investments connected to the Recovery and Resilience Plan (RRP). By contrast, the implementation of the RRP could lead to more powerful crowding-in effects and a stronger impact of key reforms on potential growth.”
