Brussels improves 2024 forecasts for Spanish growth (+2.1%) and deficit (3%)

spain savings rate

The European Commission (EC), in its new macroeconomic estimates, has revised Spain’s Gross Domestic Product (GDP) growth in 2024 upwards, from 1.7% to 2.1%. This is well above the Eurozone average (0.8% and 1.4% respectively) and ahead of the major economies (Germany will have no growth this year and France and Italy just 0.7% and 0.9%), and is a four-tenths improvement on what the Commission thought would happen in February, thanks to data from the first five months of the year.

For 2025 the EC has proceeded in the opposite direction, revising downwards its estimate of Spanish GDP growth to 1.9% from 2.0% in its previous estimate.

As regards average inflation, the EC now expects average inflation to be 3.1% compared to the 3.2% previously expected. Looking ahead to 2025, the EC expects average inflation to stand at 2.3% compared to 2.1% in its previous projections.

In addition, the EC expects the public deficit to be 3.0% in 2024, lower than the 3.2% previously expected, and this figure is key to try to avoid the opening of an Excessive Deficit Procedure. On the other hand, Brussels expects public debt to be reduced by one point more than previously projected, to stand at 105.5% of GDP at the end of the year.

On 19 June the Commission will say which countries are in the Excessive Deficit Procedure as part of the so-called Spring Package. There will be a report for the 11 that did not comply in 2023, but not all of them will necessarily recommend the corrective procedure.

In September, moreover, each European government will have to present a fiscal adjustment path for the next four to seven years, on which all must make efforts. Much more so for those whose deficits and debts are out of control, but also for those whose deficits and debts are below 3%, which is considered a maximum threshold, but not the desired target.

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