Brussels Raised Its Forecast For Spain’S Economic Growth, But Warned Of A Wave Of Corporate Bankruptcies

2021-02-11   |   by CusiGO

After the EU’s biggest blow, the biggest rebound followed. Brussels on Thursday raised Spain’s growth forecast to 5.6% from 5.3% in 2021 and 5.3% from 4.8% in 2022. The European Commission’s projected tax rate is the most powerful in the EU as a whole.

Nevertheless, Brussels believes that Spain will not be able to recover its pre crisis GDP by the end of 2022, and that when it begins to withdraw its stimulus measures, it faces increased risk of bankruptcy. Overall, it will grow by 3.8% this year and next year. Brussels’s forecast is lower than the government’s (7.2%), but does not include the impact of the recovery fund.

Brussels is finally showing some optimism. Europe’s economy is facing another recession after a 0.5% decline in the last quarter of this year, but EU institutions are worried that the decline will be even worse. Although we have to wait until the second half to see stronger growth, the successful end of 2020 in Germany or Spain is reminiscent of the recovery in June. This is true, but there are also many problems: after the outbreak of the pandemic, a new round of infectious diseases will delay the recovery of Europe again, and Europe may suffer serious trauma due to enterprise bankruptcy, long-term unemployment or greater inequality.

The European Commission released its winter forecast on Thursday, predicting that the EU’s GDP will grow by 3.7% in 2021, 3.9% in 2022 (4.1% in autumn and 3% in autumn), and 3.8% in the eurozone within two years (instead of 4.2% and 3%).

“Because the recession in 2020 is not as severe as expected, and because of vaccine progress, we now expect the EU economy to return to its pre crisis GDP level in 2022, even if the growth forecast in 2021 is slightly lower than previously expected,” the EU member explained Economy, Paul gentironi.

However, the report stresses once again that this recovery will be uneven: “however, the pace of recovery in the EU will change significantly. Some countries suffer more from the epidemic than others, while some rely more on sectors such as tourism, which is likely to remain weak for some time. ”

Contrary to the situation in the eurozone as a whole, the European Commission has raised Spain’s prospects by three tenths this year (from 5.3% to 5.6%) and five next year (from 4.8% to 5.3%). Despite the improvement, the outlook is still lower than the Pedro s รก nchez government’s forecast that GDP will jump 7.2%. However, Madrid usually wins the digital battle with Brussels. Last fall, the executive predicted that GDP would fall by 11.2% in 2011, while the European Commission raised it to 12.4%. Finally, 11%. In addition, the community administration did not include the economic recovery fund in its calculation, and the government allocated 2.1 percentage points to the fund.

“Due to technical reasons, the autumn forecast does not include data for the third quarter. After that good quarter, Spain’s fourth quarter was relatively less negative. Among the major economies, Spain continued to maintain positive growth, with an increase of 0.4%. According to our data, Spain’s rebound is very strong, excluding the recovery and resilience plan, “gentiloni said.

The European Commission noted a strong rebound in the third quarter of 2020 due to “severe” but “less” restrictions compared with other European countries and the positive contribution of exports. According to the report, 2021 is not a good start: the third wave of infectious diseases has created more restrictions in several communities, which will lead to a decline in private consumption and investment.

As the vaccination campaign progresses, the need to wait for what may happen will be released. In addition, international tourism is expected to “recover moderately”, which will accelerate the improvement of Spain’s external balance, especially in 2022. However, this kind of take-off may be strangled by the wave of bankruptcy. “One negative risk is that corporate bankruptcy rates are rising, mainly in sectors most affected by activity restrictions, which is happening as policy support measures are reduced,” the report said.