May 15, 2024
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Spain's Economy Surprises: EU Commission Raises Growth Forecast to 2.1%

The European Commission has significantly upgraded its 2024 growth forecast for Spain to 2.1%, attributing the positive outlook to the country's resilient labour market and expecting a reduction in the deficit.
Spain's Economy Surprises: EU Commission Raises Growth Forecast to 2.1%
Jorge Fernandez - Unsplash

The European Commission has significantly revised its growth forecast for Spain upwards, predicting a 2.1% increase in the country's GDP for 2024.expand_more This optimistic outlook is primarily attributed to the resilience of the Spanish labor market, which has defied earlier expectations.expand_more

The Commission's revised forecast represents a notable upgrade from its previous estimate of 1.7% growth for the year.exclamation This positive adjustment aligns with recent observations by the IMF and the Bank of Spain, who have also revised their forecasts upwards in light of stronger-than-expected economic performance in late 2023 and early 2024.

While the growth outlook for Spain has improved, the Commission has slightly lowered its projection for 2025, now anticipating a 1.9% increase in GDP.expand_more This adjustment reflects a more moderate pace of expansion compared to the robust growth expected in 2024.

In addition to the revised growth forecast, the Commission has also updated its projections for Spain's deficit and inflation. It now expects the deficit to fall to 3% this year and further decline to 2.8% in 2025.exclamation Regarding inflation, the Commission anticipates a gradual decrease, reaching the target of 2% at some point in the next year.

The Spanish government has welcomed the Commission's positive assessment, highlighting the effectiveness of its economic policies in fostering growth and stability. However, the European Commission's Commissioner for Economy, Paolo Gentiloni, has refrained from commenting on whether Spain will face an excessive deficit procedure for exceeding the 3% limit in 2023.exclamation

Overall, the European Commission's revised forecast paints a positive picture of Spain's economic prospects, underscoring the country's resilience and potential for sustained growth in the coming years. However, potential risks remain, including the impact of rising inflation in the United States and the ongoing war in Ukraine, which could influence economic conditions in Europe and globally.

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