BancaMarch | Brussels has upgraded Spain’s GDP growth forecast. The Commission’s new forecasts put Spain’s GDP growth at 5.9% in 2021 (5.6% previous estimate) and 6.8% in 2022 (5.3% previous estimate). So Spain would regain pre-pandemic GDP levels by end-next year.
The improvement in the revision is a consequence of progress in vaccination and the disbursement of European funds, of which Spain is one of the major beneficiaries. To this end, the Commission estimates Spain will receive 12 billion euros in subsidies this year and 24 billion next year, half of what it would be entitled to.
The Commission expects Germany to grow by 3.4% in 2021 and 4.1% in 2022, France by 5.7% and 4.2%, and Italy by 4.2% and 4.4%.
The Commission has also upgraded the outlook for Spanish debt. The body expects public debt to drop to 119.6% of GDP this year, while by 2022 it is expected to fall to 116.9%. The public deficit, above 11% in 2020, would fall to 7.6% in 2021 and 5.2% in 2022. The most negative note in the Commission’s expectations comes on the employment side, with the employment rate this year seen at 15.7% and 14.4% in 2022.
The Commission highlights the role of the ERTEs in cushioning the impact of the crisis on the labour market, while warning of a wave of corporate insolvencies. However, it also acknowledges the reinforced liquidity due to the public guarantee scheme and the moratorium on payments.