Spain: Government Raises Economic Growth Forecast, Job Creation

Spain’s Council of Ministers has agreed to an upward revision of the macro-economic forecasts both for this year and next year.

Spain’s Minister for Economic Affairs, Industry and Competitiveness, Luis de Guindos, reported that the government has updated the projected growth contained in the Budget Plan sent to Brussels in mid-October, when it was operating as a caretaker government.

Luis de Guindos explained that the government is raising the economic growth forecast to 3.2% in 2016 and to 2.5% in 2017. The estimated growth rate for the following two years stands at around 2.4%. According to the minister, “these are prudent figures” and “perfectly within our reach”, which “highlight the macro-economic stability of the Spanish economy.”

In this regard, Luis de Guindos emphasized that the figures are based on a moderate increase in private consumption, a positive contribution from the foreign trade sector to growth and very low inflation. Moreover, an external surplus in the balance of current account payments has been maintained, which will hit 2% this year, and over the next four years the economy will post a financing capacity with the rest of the world of 2% of Gross Domestic Product (GDP).

Job creation

The Minister highlighted that the unemployment rate will fall to 12.8% of the active population by the end of 2019. “That is a fall of more than eight points”.

In this regard, he recalled that the unemployment rate in Spain rose as high as 26.9% at the start of 2013. It currently stands at 18.9%, according to the figures published by the Labour Force Survey (Spanish acronym: EPA) and will gradually fall to reach this forecast rate of 12.8%.

As regards employment, Luis de Guindos stressed that, “it is perfectly viable to end up with more than 20 million people in work by the end of the year 2019, specifically the figure of 20,068,000, which will represent an increase in round numbers of 2 million more people in work”. During the fourth quarter of 2015, the number of people in work stood at approximately 18.100,000, he recalled.

Unemployment, according to the forecast made by the government from the EPA figures by comparing the fourth quarter of 2015 with the fourth quarter of 2019, will fall by 1,841,000 people. “Unemployment will fall at a rate slightly higher than 430,000 people a year”, the minister said.