Brussels has raised the growth forecast for the Spanish economy to 3% in 2024. This is higher than the previous expectation. However, these figures do not yet take into account the possible economic effects of the DANA. Furthermore, inflation is set to fall to 2.8% this year.
The European Commission is more optimistic than the Spanish Government and the Bank of Spain. Spain’s GDP will grow strongly due to higher consumption and investment. Average growth in the eurozone is expected to be 0.8%, and in the EU 0.9%. The economies of Malta (5%), Croatia (3.6%), and Cyprus (3.6%) are growing the fastest.
European economy
Although the European economy is growing, it is growing modestly after a long period of stagnation. By 2025 and 2026, growth will accelerate. Germany will recover with growth of 1.5% in 2026, while growth in Italy and France will remain around 1%.
Decline in inflation and government deficits
Inflation will continue its downward trend. Nevertheless, inflation will still be above the 2% target this year and next. By 2025, Spain will meet this target.
The European Commission expects inflation in Spain to fall from 3.4% in 2023 and 2.8% in 2024 to 2.2% in 2025 and eventually to the target of 2% in 2026. The EU expects a similar scenario, with a decline from 6.4% last year to 2.6% this year.
Spain’s public deficit is set to fall to 3% of GDP this year. This decline will continue next year, with the government deficit reaching 2.7% in 2026 and remaining stable thereafter. The debt-to-GDP ratio will decline from 102.3% to 101.1% in 2026.
Spain has highest unemployment rate in the EU
Employment in Spain will grow by about 2% annually, according to the European Commission. Unemployment will remain above 11% until 2026, when the unemployment rate will reach 10.7%.
Spain has the highest unemployment rate in the EU this year, at 11.5%, followed by Greece. This puts Spain well above the average of the eurozone (6.5%) and the EU-27 (6.1%).
Also read: Spanish economy exceeds expectations