The Spanish economy in 2019 and forecasts for 2020-2022

The Spanish economy in 2019 and forecasts for 2020-2022

Fecha: febrero 2020

Raymond Torres, María Jesús Fernández

Previsiones económicas, Desaceleración, Esportaciones, Tensiones comerciales

Spanish and International Economic & Financial Otlook, SEFO, V. 9 N.º 1

The Spanish economy registered growth of 1.9% in 2019, in line with October forecasts. The forecast for growth in 2020 is 1.5%, shaped by a slowdown in housing investment, public consumption and exports, the latter marked by a climate of heightened trade tensions and a slowdown in trade in manufactured products. Based on an improved global backdrop (i.e., relaxation of US/China trade tensions, expansionary monetary –and in some cases fiscal– policies), the slowdown in Spain could hit bottom during the second half of the year, facilitating a modest rebound in 2021 and 2022 to 1.7%. Under those conditions, Spain would create close to 800,000 jobs over the next three years, fuelling a drop in the unemployment rate to 11.1% in 2022. A key concern lies with the public deficit, which, pending specification of the new government’s economic policy, is barely expected to come down during the projection period, at an estimated 2.2% of GDP in 2022. In any event, these forecasts may be subject to revisions once the 2020 budget is approved and there is more clarity over the new government’s economic policy agenda. However, the biggest downside risk lies abroad, particularly with the prevailing trade tensions which, if they were to intensify, could hurt the economic outlook.

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