Airef lowers Spain's economic growth forecast for 2021 from 8.2% to 6.6%

The review is due to the possibility of a fourth wave of the pandemic and the delay of European funds

2 min
The president of AIReF, Cristina Herrero

MadridThe Independent Authority for Fiscal Responsibility (Airef) joins the agencies that have qualified their optimism about the growth of the Spanish economy for this year. The Airef has cut its forecast from the 8.2% it had initially estimated to 6.6% because of the pandemic - which is dragging on and threatens a fourth wave - and because of the delay in implementing the Recovery Plan. The first factor has caused the Spanish GDP to grow less than expected in the last six months, while the impact of European funds will hardly be felt before 2022, as highlighted by Airef in its report published Thursday.

The body that audits the Spanish public accounts notes on the one hand that the recovery that began in the third quarter of 2020 was cut short in the last quarter, and on the other, that the provisional information available during the first three months of 2021 suggest a contraction of GDP. Airef sources have stressed that the "slower than expected" pace of vaccination and the possibility of new restrictions dampens the recovery: "The pandemic is far from being controlled. A period of uncertainty with a possible fourth wave now starts and it can bring more restrictions".

The agency led by Cristina Herrero also highlights the lack of specifics in the Recovery Plan projects. In fact, the government of Pedro Sánchez has not yet approved it nor made it public, although it plans to do so next week. This uncertainty about the European funds has forced a downward revision of their impact on GDP, from 2.7 to 1.6 points of GDP.

Precisely this Thursday, the economic vice president, Nadia Calviño, has admitted that the central executive will revise its growth forecast for this year, currently at 7.2% without taking into account the European funds and 9.8% counting the impact of the Recovery Plan. "We left behind a tough first quarter, which is the main reason why we will revise our forecast for this year downwards: we anticipated growth of around 7% and it may be lower," Calviño said in an interview with Bloomberg TV. The Bank of Spain has also recently lowered its GDP growth forecast to 6%.

Deficit improvement

As for the public deficit, the Airef estimates that it will stand at 7.6% this year, three tenths less than it predicted in November. The improvement is explained by the forecast of the gradual withdrawal of measures against the pandemic, tax changes included in the draft general state budget and other technical factors. All this will bring the deficit reduction this year to 3.3 points of GDP.