Nearly 500,000 jobs will be created each year, the number of employed people will exceed 22 million in 2025 and the unemployment rate will fall below 10% in 2026
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The Council of Ministers approved on Tuesday the update of its forecasts for Gross Domestic Product (GDP) growth, which place the growth of the Spanish economy at 2.7% for 2024, three-tenths more; at 2.4% for 2025, two-tenths more, and at 2.2% for 2026, compared to the 2% announced last July.
During the press conference following the Council of Ministers, the Minister of Economy, Trade and Business, Carlos Cuerpo, explained that these new estimates reflect the “solid” evolution of the Spanish economy, which is recording “stronger, more balanced and more responsible” growth.
“The Spanish economy is emerging stronger from the recovery, already in 2023 above our main economies, despite having been the most affected among the largest European economies, and with forward forecasts that place us growing stronger and faster than them and, therefore, widening this gap even further,” he stressed.
This improvement in the macroeconomic scenario until 2026 also responds to the upward revision recently carried out by the National Institute of Statistics (INE) of GDP growth in the period 2021-2023, which has meant an additional increase in cumulative growth of 1.1 percentage points between 2019 and 2023 and an increase of more than 36.4 billion euros in nominal GDP, explained Cuerpo.
This review also has an impact on the ratio of public debt to GDP, as the minister stressed, since, with the new data, the Spanish economy would have already reached, in 2023, the objective that had been set for 2024 of reaching 105% of debt to GDP, thus advancing one year.
“These figures are an element of confidence going forward in terms of the responsibility with which the Government has behaved in terms of budgetary action, even in years of absence of fiscal rules at European level, with a continued reduction of debt,” he stressed.
PRIVATE CONSUMPTION AND INVESTMENT WILL DRIVE THE GDP
According to the Ministry of Economy, private consumption will be one of the main drivers of growth, with growth of around 2% throughout the entire period, thanks to the “good performance” of the labour market. Specifically, it is estimated that private consumption will increase by 2.2% this year, 2.1% in 2025 and 2% in 2026.
As regards public spending, the new macro scenario points to an increase of 1.8% this year and 1.6% in both 2025 and 2026, far from the 5.2% increase recorded in 2023.
In fact, the Government estimates that around 500,000 jobs will be created each year, the number of employed people will exceed 22 million in 2025 and the unemployment rate will continue to fall, reaching 11.2% in 2024, 10.2% in 2025 and 9.7% in 2026, rates very similar to those reported last July.
The Government is forecasting an increase in employment of 2.6% this year, 2.5% in 2025 and 2.2% in 2026. This growth, the Ministry explained, will be accompanied by an improvement in hourly productivity every year, and an increase in remuneration per employee, which will grow above inflation.
The Government has also revised investment growth upwards, reflecting the positive contribution and impetus of the Recovery Plan. It now estimates that investment will increase by 3.3% in 2024, 5.8% in 2025 and 4.9% in 2026.
“It is not only the impact of the Recovery Plan and the leverage that we are achieving in terms of investment thanks to the enormous effort of the Recovery Plan, largely with a green and decarbonisation vector, but also the expectation of recovery of investment in construction thanks to the policies to recover this housing supply, particularly in affordable rental housing, which we foresee for the next two years,” he stressed.
THE FOREIGN SECTOR WILL REDUCE THE GDP FROM 2025
At the same time, the Executive expects the foreign sector to remain dynamic due to the positive tone of exports, which will grow by 4.2% in 2024 before slowing down to 2.4% in 2025 and 2.3% in 2026. Imports, for their part, will increase by 2.6% this year and will accelerate their growth to 3.6% in 2025, while in 2026 they will rise slightly less, by 3.1%.
The Government estimates that domestic demand will contribute two points to GDP growth in 2024, while external demand will contribute seven-tenths of a percentage point. In the case of 2025, all growth will be based on domestic demand, as the external sector will subtract three-tenths of a percentage point from GDP, and the same in 2026, when external demand will have a negative contribution of two-tenths.
The new macro framework foresees nominal GDP growth of 5.9% for this year, 5.1% for 2025 and 4.7% for 2026, compared to the 9.1% increase experienced in 2023, and an increase in the GDP deflator of 3.1% this year, 2.7% for the next year and 2.4% for 2026.
“We have started 2024 by maintaining the good economic momentum that we already had in 2023, with good economic news that means that we, but all analysts, are updating our forecasts upwards. And what we expect, beyond 2024, is that we will continue to grow going forward,” he stressed.
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