THE EUROPEAN COMMISSION says it expects Spain to be the fastest growing of the four major economies in the eurozone until 2025.
Brussels’ calculations predict that the Spanish economy will grow at a rate of 2.4% this year, slow down to 1.7% next year and regain some pace in 2025- a year in which GDP would rebound by 2%.
The EU’s forecasts place the country above the three great powers of the bloc: Germany, France and Italy in that order.
The Commission’s analysts point out that none of these three countries will manage to grow above 1.5% in the next two years.
In fact, in the case of Germany, a small contraction of the economy is expected as early as this year.
The Commission believes that household consumption will be the driving force behind the Spanish economy next year.
As inflation eases — expected to fall to 3.4% in 2024 — households should regain some of the purchasing power lost during the economic crisis.
In addition, it is expected that jobs will continue to be created – albeit at a slower pace than so far – which will also help to boost consumption.
The Commission expects the unemployment rate to close at 12.1% this year and fall to 11.1% in two years’ time.
European recovery funds will also play a key role, as they should be able to sustain investment in a context in which financing costs will remain high due to the high interest rates maintained by the European Central Bank.
After a 2024 with more moderate growth, the economy is expected to accelerate slightly in 2025 thanks to more European funds which will be transferred to Spain from that year onwards.
However, the Commission warns that high interest rates set by the European Central Bank may dampen demand- especially with the high levels of public and private debt that exist in Spain, although it has been decreasing.
The other side of the coin is public finances as Brussels believes Spain will not be able to meet the deficit limits, even if anti-crisis measures are completely eliminated when they expire next month.
The Commission paints a picture in which Spain has settled in with a structural deficit – which always remains, regardless of whether the moment of the economic cycle is good or bad – of above 3% of GDP.