• The GDP growth forecast in 2019 is reviewed for the largest fiscal adjustment required to reduce the public deficit to 1.3%
  • The unemployment rate will be reduced to 14%, with the creation of around 800,000 jobs in the whole of 2018 and 2019
  • National demand remains the main engine of economic growth

January 11, 2019.- The Council of Ministers has updated the macroeconomic scenario that is included in the draft General State Budget for 2019. The Government estimates that the Spanish economy will grow 2.2% this year, forecast less than one tenth to that included in the Budget Plan of October 15, 2018, mainly due to the greater fiscal adjustment necessary to reduce the public deficit to 1.3%.

In any case, and within a less favorable international context, Spain will maintain a solid growth rate, higher than expected for the euro zone. The good progress of the most recent indicators, together with the fall in oil prices and the increase in citizens' disposable income associated with some of the measures adopted by the Government, point to an acceleration of growth in the last quarter of 2018 and the first of 2019.

The trend in the labor market is still positive, with the forecast of creating 800,000 jobs in the whole of 2018 and 2019 and the reduction of the unemployment rate up to 14%.

National demand remains the main driver of economic growth, with a contribution of 2.2 percentage points in 2019. On the other hand, external demand is expected to have a negative contribution of -0.1 percentage points.

It is estimated that in 2019 private consumption will grow 1.7%. Public consumption moderates its growth to 1.4% due to the more restrictive tone of the fiscal policy required to meet the 1.3% deficit target.

It is necessary to highlight the dynamism of gross fixed capital formation, due to the strength of equipment investment, which is expected to grow at 5% rates, and construction investment, with an estimated annual growth of 4.5% .

With regard to the foreign sector, it is estimated that exports of goods and services will grow by 2.8%. On the other hand, imports will have a slightly higher growth than 3%.

Finally, the current account balance is expected to remain a surplus and the Spanish economy maintains financing capacity abroad.

This dynamic and sustained growth will be compatible with a contained price evolution.

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