Forecasts, Spain

Against the backdrop of the current synchronised global economic slowdown, the main national and international organisations forecast growth of between 1.9% and 2% annually in 2019 for the Spanish economy. Additionally, by 2020, the Funcas Consensus forecasts that growth will slow down to 1.6%. This rate will be based mainly on the positive contribution of domestic demand (+1.7 pp), while the external sector will have a negative contribution -0.1 pp.

In 2020, job creation will dip by 0.8 pp compared with 2019, to stand at 1.4% per year, and the unemployment rate will be 13.5% of the active population, which is 0.6 pp lower than in 2019.

In 2020, the CPI will increase by 1.1% annually, which is 0.4 pp higher than the one recorded in 2019 (0.7%).


Labour Force Survey Q4 2019, Spain

In Q4 2019, the number of employed people hit 19,966,900, which is 2.1% more year-onyear but 0.9 pp less than a year earlier, and is the lowest increase since 2014. By sectors, the creation of employment in services and industry registered the greatest increases (2.5% YoY and 2.1% YoY, respectively), while in construction it dipped to 0.3%. In contrast, employment in agriculture fell by 3.8% in this period.

On the other hand, unemployment rate registered the lowest reduction in six years of a mere 3.4% (12.3% in Q4 2018), to hit a total of 3,191,900 unemployed people, placing the unemployment rate at 13.8% of the active population, the lowest since Q3 2008. Thus, in 2019 the average rate of unemployment reduction was 6.5% per year, which is 4 pp lower than the average correction recorded between 2014 and 2018 (-10.5%).


External sector, Spain

Between January and November 2019, Spanish exports of goods increased by 1.3% year-on-year, which is 2.3 pp less than in the same period of 2018, to €267,523 million. This evolution is mainly explained by the decline in international trade and the deterioration of growth in the main economies of the Eurozone.

By geographical areas, exports to the EU (65.9% of the total) grew by 1.7% year-onyear and those directed to third countries (34.1%) increased by 0.8%.

On the other hand, imports recorded an increase of 0.7% year-on-year, which is 5.1 pp less than in the same period of 2018, to €297.409 million. As a result of proportionally increased growth of exports compared to imports, the trade deficit narrowed by 4.1% to €29,886 million.


Economic situation, Germany

After the German economy shrank by 0.2% quarter-on-quarter in Q2 2019, it is forecasted to grow by 0.1% QoQ in Q4 2019, and at an annual growth rate of between 0.5% and 0.6% for the whole of the year. This evolution is mainly explained by the growth in domestic demand on the back of the increase in wages (around 3% per year) and public expenditure (2.5% per year).

In this context, by 2020, the German Government has revised its GDP growth forecasts upwards to 1.1% annually, which is 0.1 pp higher than the previous forecast. On the other hand, the German business confidence IFO index shrank to 95.9 points in January, compared with 96.3 points in December, although the manufacturing sector confidence improved due to the slight recovery of industrial production.


“Stagflation” emerging markets

In 2020, in an environment of trade tensions between China and the US, one-third of the main emerging economies will see their GDP decline, and of these, two thirds will also experience soaring inflation.

The case of India stands out, where a growth correction for 2019 of up to 4.8% per year is expected, after six consecutive months of economic slowdown and a consumer price inflation rate of 7.35%. The main causes of this economic deterioration revolve around the dwindling private consumption, the rise in doubtful loans, and the waning business confidence. According to the forecasts for 2020, the Indian economy will see its growth wilt by 1.7 pp and inflation will  increase by 0.3 pp.


Oil price evolution

Since the beginning of 2020, the price of crude oil has dropped by 12%, to the tune of $60 per barrel of Brent, which is its lowest level since October 2019. This is mainly explained by the fear of a fall in Chinese demand in light of the deadly coronavirus spreading.

In this context, the OPEC is eyeing deeper production cuts at its March meeting to mitigate forces that are exerting strong downward pressure on oil prices.


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