The Spanish economy will accelerate the pace in the second semester on the rhythm of the extension of the vaccination process and the arrival of European funds. Brussels raised its growth forecast for this year to 5.9%, up three-tenths of what it was in February. For next year, the European Commission believes that community assistance will boost the Spanish economy by 6.8%, compared to the 5.3% it has projected so far. The expansion that Spain will see, in both years, will be the highest in the entire European Union, which will grow as a whole by 4.2% in 2021 and 4.4% in 2022. However, Spain will recover its gross domestic product (GDP) before the pandemic at the end of next year, After a year the European Union as a whole.
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The European Union, which entered a recession in the first quarter of the year, has begun to restore optimism. The vaccination rate is finally higher than in the United States or the United Kingdom. Despite the fact that its economy is still faltering from Washington and Beijing, it finally thinks it will also be able to fly thanks to the massive aid it will start sending to the capitals in the summer that is estimated to have an impact equivalent to 1.2% of GDP by the end of the year. 2022. In fact, Brussels expects a strong increase in public investment in 2022 by 3.5%, reaching its biggest boost since 2010.
Spain, which suffered a 10.8% collapse in 2020, will lead the growth of the eurozone thanks to the lifting of restrictions, with 34,750 million euros of European money arriving between this year and next year. Brussels also predicts the moment when Spain will restore its GDP before the outbreak. And it will do so at the end of 2022, not in 2023, as had been anticipated in previous projections.
The date by which countries return to pre-crisis levels is key to deciding whether the European Union will keep fiscal rules on hold next year. The Commission has recommended that it do so, but some countries, including Germany, have requested to wait first to see the Commission’s prospects before settling the matter. Despite the fact that the German economy has dragged the eurozone as a whole into recession, Brussels expects that by the end of this year it will return to the pre-depression level of activity caused by COVID-19. However, Economy Commissioner Paolo Gentiloni warned that the European Union was still not regaining the growth path it was in before the crisis. “The recovery is no longer a mirage: it is underway. We must avoid mistakes that could undermine it, in particular the premature withdrawal of support to the economy,” he said. [que suspende las reglas fiscales] He added that it will remain until the end of 2022.
In the case of Spain, the costly recovery of tourism and recreational activity will remain heavy. Brussels believes that the contribution of external demand to GDP growth will start to be positive next year, as tourism activity is likely to approach its 2019 level. However, the sheer weight of this sector means that the recovery, according to Brussels, is subject to more uncertainties. ususally. If the vaccination campaign proceeds as planned and aid arrives on time, Spain is scheduled to take off from the second half of the year. If it is implemented [el plan de recuperación] Efficiently, with a mix of strategic projects accompanied by wide-ranging reforms, the economic impact will be significant, especially in 2022, when strong demand impacts are accompanied by a gradual contribution from the supply side, “the commission’s report states.
Bankruptcy risk
In addition to the uncertainty about the tourism sector, Brussels still sees the same risks as it did only a few months ago: that the decline in business profitability will translate into a wave of bankruptcies threatening “productive capacity and employment”. Nevertheless, the Commission highlights the package of measures adopted in March to support SMEs. Despite measures to protect workers and self-employed people, the commission believes the unemployment rate will still rise slightly to 15.7% this year and fall to 14.4% next year. This means that Spain will continue to have the second-highest unemployment rate in the European Union, after only Greece.
Although in a more moderate way, Brussels is close to the government’s forecast, which expects an increase in GDP of 6.5% in 2021 and 7% in 2022. The improvement in the forecast also means a smaller gap in the public accounts. The public deficit will decline from 11% in 2020 and remain this year at 7.6% of GDP, compared to the 9.6% indicated by the Commission in November and will stand at 5.2% in 2022. Greater slope: Brussels expects to move from 120% last year. To 119.6% this year and 116.9% next year.
