Spanish Government announces official employment and GDP forecast for 2016 and 2017
Despite the convulsive political situation in Spain, the acting government has communicated recently its estimation in terms of employment and economic growing for the period 2016-2017. The forecast shows an increase in key economic metrics.
For this year, the GDP will grow to 2.9% and 2.3% for 2017. Unemployment will fall by one million and the rate will fall to 16.6% by the end of next year, the lowest since 2008. Although these forecasts will be linked to four years of growth and job cuts, the Spanish economy will generate foreign financing capacity for the sixth consecutive year in 2017.
According to the current government, the real GDP will maintain an average “cruising speed” of 2.6% between this year and next, despite uncertainties in the international environment. This is above the euro area average foreseen by the international organizations (1.6% and 1.5% in these two years), and occurs even though the growth prospects of the world economy have been revised in a negative way from what was projected last spring (up to 3.1% and 3.5%), but with a better evolution.
By 2016, the government’s estimation is that the Spanish economy will grow two-tenths more than expected (from 2.7% to 2.9%) thanks to a greater contribution of domestic demand and a smaller drop in external demand. The variation is one tenth in both cases, up to 3.2 points and -0.3 respectively. Both private consumption and exports have been slightly revised upwards, while in the case of investment, the revision is from two tenths down to 5.4%.
By 2017, on the other hand, the government estimates that GDP will grow one-tenth less than expected in April this year, to 2.3%. This reduction is due to a lower contribution of the national demand, namely, the investment – both in construction and in capital goods – which will still grow 4.2% next year.
Although the Spanish economy will achieve four years of economic growth and job creation in 2017, the Executive expects to maintain the surplus of the external accounts, which will entail six financial years with financing capacity vis-à-vis the exterior. A positive current account balance of 1.7% of GDP is expected in 2016 and 1.5% next year. In both cases, the forecasts are the same as those foreseen in the so-called April Stability Program.
The capacity for financing abroad is also maintained at 2.4% and 2.2%, respectively. According to data from the Bank of Spain, the financing capacity between January and May of this year has already risen to 24.3 billion euros, compared to 21,000 million in the same period of the previous year.
Labor market forecasts also improved slightly over the two years. Employment in terms of national accounting (equivalent to full-time jobs in annual average) grows by 2.7% in 2016, two tenths more than estimated in April, while for 2017 job creation forecast remains at 2,2%.