The European Fund will Lead Spain to Lead Growth Throughout the EU
The European Commission estimates a rise in GDP of up to 5.9% this year and 6.8% next year
Brussels significantly improves its forecast thanks to stimulus, vaccines and trade.
After months of bad economic data, risks and restrictions, hope emerged yesterday in the spring forecasts of the European Commission. “For the first time we see optimism prevail over uncertainty,” said the Commissioner for Economic Affairs, Paolo Gentiloni, during the virtual press conference. Vaccines, the progressive lifting of restrictions, global trade and, above all, the impact from July of recovery funds have led the Commission to significantly improve its EU growth figures for this year, up to 4.2%, and the next one, up to 4.4%, compared to the 3.7% and 3.9% forecast in February. So, the institution did not take into account the push of the European stimulus.
For the countries of the euro zone, the Community Executive foresees a rebound of 4.3% in 2021 and 4.4% in 2022, compared to the 3.8% indicated for both years three months ago.
Spain will lead this European take-off, standing out especially next year, thanks to the impulse of European aid. As elEconomista announced this Tuesday, the Commission improved its growth forecasts for our country to 5.9% this year and 6.8% next year, three tenths higher than the previous forecast for 2021 and a point and a half more by 2022.
In this way, we will be the economy that has grown the most in these two years. In addition, as the Commission points out in the forecast document, thanks to the arrival of the funds, our country will recover at the end of 2022 from the economic collapse caused by covid-19, leaving the hole of 10.8% of GDP registered last year. After Spain, the Commission expects France to register the strongest growth in the Union this year, at 5.7%, although its growth will slow to 4.2% in 2022.
Brussels highlights that the launch of the fund in Spain will play “a decisive role”
In 2021 and 2022, Germany’s economy is expected to grow by 3.4% and 4.1% respectively, while for Italy it projects 4.2% and 4.4% for the next two years. However, the projections of Brussels are somewhat less optimistic than those of the Government, which last April scored 6.5% for this year and 7% for next. Gentiloni explained the difference, noting that “it will take some time until the projects [of the Spanish recovery plan] reach a phase in which spending is effectively undertaken, so it is possible that the impact on economic activity of the plan will be more strong in 2022 “.
Even so, the Commission highlights that the launch of the fund in our country will play “a decisive role” in our rebound over the next two years. “If implemented efficiently, with its combination of strategic projects accompanied by extensive reforms, the economic impact will be significant, particularly in 2022, when strong demand effects would be accompanied by a gradual contribution from the supply side,” he says the institution.
The report expects unemployment to reach 15.7%, and then fall to 14.4% in 2022
Brussels warns that the good Spanish forecasts “are still subject to a higher degree of uncertainty than normal”, due to questions about the improvement of the tourism sector, consumer behavior when restrictions are lifted, “the size or the impact “of the own restrictions to contain the virus from now on, and the absorption of recovery funds. The Community Executive adds that the fall in profits could lead to business insolvencies. However, European aid will help contain unemployment and clean up public accounts.
Brussels expects unemployment to rise slightly to 15.7%, then fall in 2022 to around 14.4%. After debt has skyrocketed 25 points due to the impact of the virus to 120% last year, it will gradually begin to fall to 119.6% this year and 116.9% next year. The Commission also improves its forecast for our deficit, which will still remain at high levels this year (7.6%) and next year (5.2%).