Spanish Economy in 2019

A new year has begun and it is time to look back and make an economic balance of Spain. During the second semester of 2019, the Spanish economy keep showing expansion behavior, maintaining progress rates higher than those recorded in the eurozone as a whole.

It is expected that this period of expansion of the Spanish economy will continue over the next three years, since the patrimonial situation of homes and companies is improving, which is a key support for the increase in domestic demand, to which they add loose financial conditions thanks to the measures adopted by the Governing Council in September, which accommodated the monetary policy of the European Central Bank.

Regarding to the foreign demand, according to the Bank of Spain, even if it is true that it has recently decrease, it is expected to recover over the next three years, so it will be a positive rate of progress of the Spanish economy that will make a grate environment for possible investments. Indeed, it is expected a growth to the 1,7% of the GPD for 2020, 1,6% for 2021 and 1,5% for 2022. This slowdown will be caused by an increase of the imports regarding to the exports. 

The national consumption had slowdown because of the decrease in job creation and the high of the domestic savings rate, inter alia.

With regard to inflation, a three-year profile is expected to increase, as a result of the progressive widening of the positive production gap to which this expansive phase is taking place and the fall in the unemployment rate. Monetary policy will also contribute to the growth of core inflation, which will be slightly reinforced by the price of oil in future markets.

The principal risk that faces the Spanish economy comes from the uncertainty at the national level about the design of economic policies and, in particular, of the elements necessary to resume the process of tax consolidation, to the extent that the new Government has not yet been constituted after the last general elections.

For now, this is a summary of the expectations for the following years of the Spanish Bank; we will see if the next economic events are according to their predictions.  

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