Funcas raises its forecast for 2021 to 6.3%, but cuts its forecast for 2022 to 5

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The Savings Bank Foundation (Funcas) has raised three tenths, to 6.3%, its growth forecast for the Spanish economy for this year due to the increase in domestic demand. On the contrary, it has cut four tenths, to 5.8%, that of 2022 due to the impact of the new variants of the virus.

As explained by the general director of Funcas, Carlos Ocaña , and the Phone Number List director of Coyuntura, Raymond Torres , this upward revision for this year has already been reduced by the impact of the new delta variant on tourism. This will subtract " at least three tenths " from that expected growth of 6.3%.

However, they point out, the recovery of the economy in 2021 will be more intense thanks to the progress of the vaccination process against covid, the release of pent-up demand and the comeback of the world economy.

On the contrary, inflation levels, restrictions in the face of new variants of the virus and the loss of vigor of some of the engines of recovery " may complicate " the 2022 scenario.

Bad prospects for tourism
Funcas has also lowered the prospects for the recovery of tourism for this year " in full uncertainty " due to countries' warnings about travel. Subtracting at least three tenths from that expected growth of 6.3%.

Torres has indicated that, in principle, his forecasts are for around 8.5 billion euros in tourism income this summer. 40% of what was entered in the same period of 2019. But, the new variant can slow down that recovery.

« The imposition of new travel restrictions by countries of origin would frustrate these expectations. Weakening a business fabric that is over-indebted and has no room for reaction ," they state in the report.

The forecast is that this percentage will rise to 50% in the fourth quarter of 2021. And that it will continue to grow until it reaches 85% of pre-pandemic levels in the summer of 2022.

Inflation, another " risk "
As they have stressed, another of the " risks " is inflation . It is expected to reach 2.5% this year and relax to 1.6% in 2022. Still three tenths more than in the previous forecast.

" Each additional point of inflation detracts one point from internal demand ," Torres pointed out. And he added, however, that this rise in prices will have a " transitory effect ."

Strong pull in consumption in 2021, but less in 2022
In detail about the increase in GDP for this year, Funcas points out that the " large contribution " will come from domestic demand. This fact is explained because the excess savings in the pandemic months " are being disbursed faster than expected ."




Thus, the contribution will be 6 points this year. Five tenths more than in May. And 5.3 in 2022, four tenths less than expected.

On the contrary, part of the increase in public consumption and investment planned for 2021 will be postponed until 2022 " as a consequence of the long negotiation period for the European funds and their late approval ." The forecasts contemplate 10,000 million euros of European funds in 2021. 4,000 million less than the May hypothesis. And they maintain the 26,000 million for 2022.

Unemployment rate
Regarding employment, they estimate an unemployment rate of 15.8% for this year, which will drop to 14.7%. But, it will continue to be far above that of other European countries, as they warn.

At the end of 2022, employment will have recovered its pre-crisis level. Although of the 450,000 workers who now remain in ERTE , only 40% will return to the market. While the remaining 60% would become unemployed or inactive .

Funcas advocates for a new " ERTE plus " mechanism, which incorporates training and retraining elements so that they do not end up increasing long-term unemployment . Regarding the public deficit, another of Spain's imbalances along with these unemployment levels, Funcas expects it to be 7.9% this year and 6.2% in 2022. Both figures revised upwards.