- Growth will remain sustainable and balanced, with positive contributions from internal and external demand
- The balance of the current account balance will be maintained with surpluses close to 1.5% of GDP for four years
- ANDl Government will continue with the budget balance commitment and will already register a public surplus in 2021
- Economic growth will be intensive in job creation and 20 million people will be reached by 2020
- The unemployment rate will continue to decrease until it reaches 10.7% of the active population at the end of 2021
The Council of Ministers has approved the Stability Program Update of the Kingdom of Spain (2018-2021) for its referral to Brussels. The document includes a forecast of growth of 2.7% this year and close to 2.5% annually until 2021, with which the Spanish GDP will chain eight consecutive years upward. In addition, a new pattern of more sustainable and balanced growth is confirmed, with positive contributions from domestic and foreign sector demand.
The new forecasts are prudent and realistic and confirm that all employment lost during the crisis will be recovered, thereby achieving the goal of 20 million employed in 2020. In addition, the public deficit will be this year at 2, 2% of GDP with primary surplus, reflecting the Government's commitment to the budget balance. Spain will register a surplus in 2021 of 0.1% for the first time since 2007.
The new projection estimates an average annual growth in these four years close to 2.5%. For employment, the same rate is expected for 2018 and slightly lower for the rest of the forecast period, which will allow the creation of 1.7 million jobs during these four years. The unemployment rate will be reduced to 10.7% at the end of 2021, a figure not reached since 2008, that is, since the beginning of the recession.
The growth differential will continue to be favorable to the Spanish economy compared to the main countries in our environment, so this behavior is not explained by the "tail winds", from which all economies have benefited, but for the correction of macroeconomic imbalances. Spain has been able, through the reformist impulse and the effort of households and companies, not only to overcome the greatest economic crisis in its democratic history, but also to lay the foundations to continue developing a healthier, more balanced and sustainable economic model.
Like the macroeconomic chart that accompanies the General State Budget (PGE) Project for 2018, the 2.7% growth for this year represents an upward revision of four tenths compared to the previous revision due to several factors: greater investment , improvement of the international environment, positive impact of the measures included in the PGE Project and moderation of the economic uncertainty related to the situation in Catalonia, following the application of Article 155 of the Constitution. In addition, the most recent national and international activity and employment indicators indicate a dynamism in the first months of 2018 higher than expected. In this sense, for the first quarter of the year, the INE advances a growth of 0.7% quarter-on-quarter and 2.9% year-on-year.
The growth will continue to have positive contributions throughout the projection horizon of both national demand and net external demand, consolidating investment and exports as the most dynamic items of GDP, with the consequent favorable effect on productivity and on potential growth of the Spanish economy. Among the components of national demand, private consumption is expected to continue growing at high rates, while within the investment, the equipment and assets component will maintain an expansive path in a context of favorable business expectations and reduced types of interest. Regarding the foreign sector, real exports of goods and services will grow above 4% in the 2018-2021 period, driven by competitiveness gains.
In addition, sustained economic growth will continue to be compatible with the progress in correcting the main macroeconomic imbalances. The balance of the current account balance is expected to be a surplus during the entire forecast period, being around 1.5% of GDP and thus contributing to the reduction of the balance due from the net international investment position. Thus, in 2021 eight consecutive years of growth would be added and, at the same time, nine of surplus in the current account, an unprecedented milestone in our recent economy, especially when it is accompanied by a sustained period of growth in domestic demand.
In the financial field, an intense process of deleveraging of the private sector has been carried out, compatible with a notable increase in new credit operations for households and SMEs. This deleveraging process is expected to continue in the coming years, reducing the vulnerabilities of the Spanish economy to possible external shocks.
