The Government maintains its growth forecast for 2021 despite the summer season being at stake

The Government has maintained its growth forecast at 6.5% of the Gross Domestic Product (GDP) for this year and 7% for 2022, with an upward revision of the contribution of the foreign sector. The Government has updated its macroeconomic forecasts on Tuesday and has approved a record ‘spending ceiling’ for the 2022 Budgets, which includes the arrival of new items of European funds planned for an amount of 75,000 million for these three years.

According to the First Vice President and Minister of Economic Affairs and Digital Transformation, Nadia Calvin, at a press conference after the Council of Ministers, about a year and a half after the start of the pandemic, a ‘Solid’ recovery economic in this second part of the year. Private consumption will contribute to this growth, which has taken off in the second quarter thanks to the saved savings of 60,000 million during the pandemic.

The Executive’s forecasts remain in line with the estimates of national and international organizations. Among them, the Bank of Spain foresees an increase in GDP for this year 6.2% and 5.8% in 2022; the Independent Authority for Fiscal Responsibility (AIReF), places the growth of the Spanish economy at 6.6% in 2021; and the European Commission estimates that it will rise 6.2% this year and 6.3% next.

The Executive has also maintained its estimates of the unemployment rate, which this year will be 15.2% and it will be reduced to an average of 14.1% in 2022, a downward path that will continue in the following years. Despite the estimated improvement in the unemployment rate, the Government expects employment to grow by 4% this year, the same as that forecast in April, while in 2022 growth will stand at 2.7%.

Calviño has highlighted that the unemployment rate forecast by the Government for this year and next is 10 points lower than that set by various organizations, thanks to the economic policy response to the pandemic.

‘Spending ceiling’

The Council of Ministers approved this Tuesday the limit on non-financial spending, known as ‘spending ceiling’, of the State Budget for 2022, which is maintained in the 196,142 million euros, in line with the figure registered a year earlier, including extraordinary transfers to the autonomous communities and Social Security and part of the European funds.

The Government has also maintained its forecast of public deficit, by predicting a 8.4% of GDP mismatch this year, and has established a deficit reference rate of 5% in 2022. The minister explained that in two years the deficit will have been reduced by more than 50%. Excluding European funds, the ‘spending ceiling’ would stand at 169,787 million euros, 0.7% more.

This has been pointed out by the Minister of Finance and Public Function, María Jesús Montero, in the press conference after the Council of Ministers, where she pointed out that the ‘spending ceiling’ remains at all-time highs and where she stressed that the limit of spending incorporates a transfer from the State to Social Security of 18,396 million.

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