20 Mar

Macroeconomic projections for the Spanish economy 2018-2020: key figures (Banco de España)

The Banco de España has just published a note today, March 20, which describes the key features of the macroeconomic projections for the Spanish economy over the period 2018-2020.

According to the note, after expanding by 3.1 % in 2017, GDP is expected to grow by 2.7 % in 2018, by 2.3 % in 2019 and by 2.1 % in 2020. Compared with the previous projections, GDP growth has been revised up by 0.3 pp, 0.2 pp and 0.1 pp in each of the three years of the projection, as the recent performance of both the Spanish economy and its main export markets was more favourable than anticipated at the end of 2017, budgetary policy is more expansionary than anticipated three months ago and the political situation with respect to

Catalonia is having a slightly less negative impact than was assumed in the baseline scenario of the previous projections.

Domestic demand will continue to support GDP growth, although a slight slowing of the various components of domestic demand is forecast over the next few years. Meanwhile,

net external demand will continue to make a positive, albeit slightly smaller, contribution.

Employment growth

Employment growth over the course of the projection horizon is expected to moderate from the high growth rates observed in the last three years, in line with the projected slowing of

activity. Sustained job growth will give rise to further decreases in the unemployment rate, bringing it close to 11 % by the end of 2020.

A certain amount of variability in consumer prices (CPI) is forecast for 2018 in year-onyear terms, as a result of the base effects associated with energy prices. The subsequent path of the CPI is likely to be dominated by the core component, which is projected to rise gradually in a context of a widening positive output gap. In terms of the annual average

rate, after a 2 % rise in 2017, CPI growth is forecast to slow to 1.2 % in 2018, subsequently accelerating to 1.4 % and 1.7 % in 2019 and 2020, respectively. In the current projections, headline inflation has been revised down by 0.2 pp in 2018 as the recent behaviour of the energy component was somewhat less dynamic than projected in December. No significant changes are envisaged over the following two years.

On the external front, the risks to the baseline GDP growth scenario are tilted to the upside in the near term, against the backdrop of a series of recent positive surprises

concerning the global economy’s growth rate, suggesting that its expansionary momentum may last longer than considered in the baseline scenario of these projections. Click here to access to the “Quarterly reports on the Spanish economy (first quarter 2018)”. And if you are thinking about forming a company in Spain, don´t hesitate to contact us for further informations.


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