Government Raises Its Deficit Forecast To 8.4% Of GDP This 2021

The Government raises its deficit forecast to 8.4% of GDP this 2021. Minister Montero estimates that it will be 7 tenths more than the figure collected in the draft of the General State Budgets.

The Government has raised the deficit forecast for 2021 to 8.4% of GDP, which is seven tenths more than the 7.7% forecast included in the General State Budget (PGE) project.

This has been advanced by the Minister of Finance and Government spokesperson, María Jesús Montero, before the Executive sends the Stability Program to Brussels this Friday with the new fiscal scenario and the update of the macroeconomic framework, as well as the Recovery and Transformation Plan and Resilience, with the package of reforms and investments that Spain intends to promote to channel the 140,000 million European reconstruction funds that it will receive until 2026.

The impact of the third wave
The minister has defended that the updated path this Friday is “consistent” with the macroeconomic picture already presented on the forecast of GDP, unemployment and employment for the next few years, and this figure does not include the impact of the pending reforms, thus it has been done under an “inertial scenario”.

Specifically, the latest update of the table contemplates a GDP growth of 6.5% for this year, below the almost 10% initially expected, due to the “strong impact” of the third wave.

The public deficit closed the year 2020 at 10.09% of GDP , excluding Sareb’s losses (with which it rose to 10.97%), below the 11.3% initially forecast by the Executive. Looking ahead to 2022, the deficit will be 5%; at 4% in 2023 and at 3.2% in 2024.

Although the minister has ensured that there is data that invite “optimism” in the face of the crisis, she has also defended that economic stimuli be maintained “as long as necessary” , since it could pose a “risk” on what has already been done. remove them ahead of time.