By Deirdre Tynan • 07 July 2021 • 18:18
Spain’s economy is forecasted to grow by just over six per cent in 2021 and 2022.
The Spanish economy is forecasted to grow by 6.2 per cent in 2021 and 6.3 per cent in 2022, according the EU’s latest interim economic forecast.
The EU’s economy is forecast to rebound faster than previously expected, as activity in the first quarter of the year exceeded expectations and the improved health situation prompted a swifter easing of pandemic control restrictions in the second quarter, the European Commission said in a statement on July 7.
According to the Summer 2021 interim Economic Forecast, the economy in the EU and the euro area is set to expand by 4.8 per cent this year and 4.5 per cent in 2022.
Growth is expected to strengthen due to several factors. First, activity in the first quarter of the year exceeded expectations. Second, an effective virus containment strategy and progress with vaccinations led to falling numbers of new infections and hospitalisations, which in turn allowed EU Member States to reopen their economies in subsequent quarter. This reopening benefited service sector businesses in particular.
Upbeat survey results among consumers and businesses as well as data tracking mobility suggest that a strong rebound in private consumption is already underway. In addition, there is evidence of a revival in intra-EU tourist activity, which should further benefit from the entry into application of the new EU Digital COVID Certificate as of July 1. Together, these factors are expected to outweigh the adverse impact of the temporary input shortages and rising costs hitting parts of the manufacturing sector.
Uncertainty and risks surrounding the growth outlook are high, but remain overall balanced.
The risks posed by the emergence and spread of COVID-19 virus variants underscore the importance of further picking up the pace up of vaccination campaigns. Economic risks relate in particular to the response of households and firms to changes in restrictions.
Inflation may turn out higher than forecast, if supply constraints are more persistent and price pressures are passed on to consumer prices more strongly.
“The EU economy is set to see its fastest growth in decades this year, fuelled by strong demand both at home and globally and a swifter-than-expected reopening of services sectors since the spring,” said Paolo Gentiloni, Commissioner for Economy.
“Thanks also to restrictions in the first months of the year having hit economic activity less than projected, we are upgrading our 2021 growth forecast by 0.6 percentage points. That is the highest upward revision we have made in more than 10 years and is in line with firms’ confidence reaching a record high in recent months. With the Recovery and Resilience Facility taking off, Europe has a unique opportunity to open a new chapter of stronger, fairer and more sustainable growth.
“To keep the recovery on track, it is essential to maintain policy support as long as needed. Crucially, we must redouble our vaccination efforts, building on the impressive progress made in recent months: the spread of the Delta variant is a stark reminder that we have not yet emerged from the shadow of the pandemic,” he added.
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Deirdre Tynan is an award-winning journalist who enjoys bringing the best in news reporting to Spain’s largest English-language newspaper, Euro Weekly News. She has previously worked at The Mirror, Ireland on Sunday and for news agencies, media outlets and international organisations in America, Europe and Asia. A huge fan of British politics and newspapers, Deirdre is equally fascinated by the political scene in Madrid and Sevilla. She moved to Spain in 2018 and is based in Jaen.
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