Banking boosts GDP growth to 2.2% this year, creating half a million new jobs

Spain’s economy has started the year on a strong footing, leading to ongoing upward revisions of growth prospects among major banks and think tanks. In particular, banking increases forecasts crecency before 2.2%according to data collected in Spanish Economic Forecast Dashboard May, published this Wednesday by Savings Bank Fund (Funcas). And what’s even better: the labor market, which a few months ago seemed to be showing signs of slowing, is now pointing to a return to activity with the potential creation of more than half a million jobs within a year.

The macroeconomic analysis institutes of the major banks are optimistic about Spain’s economy this year after a strong first quarter in which activity recorded a 0.7% rise between January and March. Specific, Santander bets on an advance of 2.2%, followed by BBVAResearch and her own Funcas (2.1% in both cases) and KaishaBank (1.9%). However, three of the four above-mentioned analysts are beating expectations. Government (2%). However, these are not the only charities pointing to this power, as Oxford Economics forecasts growth of 2.4%, followed by International financial analysts, Spanish Confederation of Business Organizations (CEOE) And Metisall three with 2.3%, and CMadrid Center for Economic Research and Economic Group (2.2%).

Optimism about the Spanish economy has increased significantly this year across the board. In fact, two thirds of the 19 think tanks included in the consensus Funcas revised their growth outlook in this release compared with the March report after 16 companies did the same in the same month. An achievement that was fundamentally based on investment and export, suggesting that this positive trend may continue into the future. Specifically, average forecasting institutions expect annual growth in gross fixed capital formation of 2.5% and exports of 2.3%, outpacing private consumption (2%) and government spending (2.1%).

Job

This upward revision also contributes to stronger job creation. If a few months ago various organizations predicted that the labor market would experience an intense slowdown, stronger than the economy as a whole, they now indicate that The number of employed people will continue to grow very rapidly. Specifically, the Funcas consensus predicts that employment (measured in full-time equivalent jobs) will increase by 2.2%, although major banks are going further and are betting on a 2.6% increase. BBVA Research. This implies the creation of up to half a million jobs this year, more than 100,000 more than expected in January. And, if we take into account that the promotion wage both this and next year (3.8% and 3% respectively) will be much higher than the consumer price index (3.1% and 2.3%), it seems clear that this will lead to increased progress in consumption, savings and investment in the coming months.

However, there is three big negative points. The first is that unemployment rate This is unlikely to have an impact (it will fall to 11.5%, just one tenth below the March forecast) as job creation will attract new job seekers to the labor market, be they immigrants, Spaniards abroad or people who already have a job and are looking for different, as is the case with those who have part-time work that they want to supplement or end permanent contracts with low work intensity throughout the year. The second is that inflation is accelerating slightly compared to forecasts two months ago, possibly due to the rebound in the consumer price index in recent months and the gradual reinstatement of numerous energy taxes. So the panel Funcas provides price growth by 3.1% annuallywhich is one tenth higher than previous forecasts, which is somewhat paradoxical at a time when inflation in the eurozone is cooling very sharply (with an annual rate of 2.4% in April), paving the way for interest rate cuts in the coming months.

Moreover, this greater growth is unlikely to solve the problems Spanish deficit. Analysts say the public administration imbalance will remain at 3.4% of GDP, just two-tenths less than expected two months ago, keeping Spain at risk of possible sanctions from the European Union Commission for exceeding the limit set by Brussels. by four tenths. In fact, of the 19 houses collected by Funcas, only two support the executive’s projections of a 3% deficit, with the rest even raising it to 4.2%. It must be taken into account that in the first three months of the year, public administrations increased their debt by 39.310 million euros compared to the end of last year, which represents the largest quarterly progress in the last three years. This figure, if not corrected in the rest of the year, could even threaten to increase the weight of debt relative to GDP.