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The Government reduces GDP growth to 6.5% in 2021 and raises the deficit to 8.4%

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The Government reduces the growth of the Spanish economy, placing the Gross Domestic Product (GDP) in 2021 at 6.5%, below the almost 10% initially expected, due to the strong impact of the third wave of Covid-19 and the delay in the impact of European funds .. According to the update of the macroeconomic table presented this Friday by the Minister of Finance, Maria Jesus Montero, by the end of 2022 the levels of activity prior to the pandemic would recover.

Looking ahead to the following years, the Government estimates that the economy of our country will advance by 7% in 2022, 3.5% in 2023, and 2.1% in 2024. Regarding unemployment data, the new macroeconomic picture places the unemployment rate at 15.2% this year, to gradually decrease in 2022, 2023 and 2024 to 14.1%, 13.2% and 12.7%, respectively.

Montero has highlighted that the forecast of GDP, unemployment and employment for the next few years has been made under a "inertial scenario"In other words, it does not include the impact of the pending reforms. In addition, he stressed that the better evolution of tax collection with respect to GDP, allows the impact of the worst forecast to be less. Looking ahead to 2021, the Treasury estimates that the collection increased by 7.6%, a figure higher than the estimate of the advance of GDP.

The deficit, for its part, will register in 2021 its second largest decrease in the historical series. However, the Government has raised its forecast to 8.4% of GDP, seven tenths more than the previous forecast made last fall. In subsequent years, the deficit will be 5% in 2022, 4% in 2023 and 3.2% in 2024, according to the forecasts of the Executive of Pedro Sanchez, which calculate that the gap between expenditure and income will not fall below the 3% of GDP limit until at least 2025.

With regard to public debt, the Government's forecast is that decrease to 119.5% in 2021, from 120% in 2020, and continue to fall to 112.1% in 2024. The minister has defended that economic stimuli be maintained "as long as necessary", since it could pose a "risk" to what has already been done the fact of withdrawing them ahead of time.

This Friday, April 30, the Government sent to Brussels the Stability Program with the new fiscal scenario and the update of the macroeconomic picture, as well as the Recovery, Transformation and Resilience Plan, with the package of reforms and investments that Spain intends to promote to channel the 140,000 million European reconstruction funds that it will receive until 2026. In addition, next Thursday, May 6, the economic vice president, Nadia calviño, will explain these figures and data to the Congress of Deputies.

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