Círculo de Empresarios | The Bank of Spain forecasts that the Spanish economy will embark on a gradual path of deceleration until 2022, and therefore maintains its 2% and 1.7% annual growth forecasts for 2019 and 2020, respectively. GDP growth rests on the back of positive evolution of domestic demand owing to the healthy wealth situation of households and companies, and a monetary policy that is accommodative. In contrast, the external sector loses dynamism as growth in exports is less than imports in an environment rife with global uncertainty.
As for job creation, it slows its pace to 2% and 1.3% annually in 2019 and 2020, respectively. This evolution puts the unemployment rate of 2019 (14.3%) on par with 2018 (14.4%).
Whereas, public deficit has been revised upwards compared with September, to the tune of 2.5% of GDP in 2019 (+0.1pp) and 2.1% in 2020 (+0.3pp), mainly due to the increase in public expenditure stemming from the CPI-linked pension indexation and the rise in civil servants’ salaries, together with the lower than expected revenue collection.