Funcas Improves Forecasts for Economic Recovery
June 20th, 2013
In a recent announcement, reported in El Mundo, the Foundation of Savings Banks (Funcas) predicted that the Spanish economy will contract by 1.5% this year and grow by 0.7% in 2014, which is one- and two-tenths percentage points more, respectively, compared to their previous forecast.
Funcas attributes this modification to the easing of deficit targets for this year and next, which will involve a less intense adjustment than expected and therefore a less contractionary effect on the Gross Domestic Product (GDP).
The Foundation also indicates that financial conditions remain very restrictive, that the real estate price adjustment is not over and that the deleveraging of households and businesses will continue to affect spending possibilities.
The organisation maintains their forecast of a drop in private consumption of 0.3% for 2014, and makes an upward adjustment of 0.9% to their public consumption forecast. They also predict that investment in capital assets will fall by 4.5% this year and that in 2014 it will return to growth.
With regard to employment, Funcas note that they expect a decline this year and next, adding that the economy will have reached a growth rate consistent with job creation only towards the end of 2014. They also predict that the unemployment rate will decline slightly in line with the decrease in the working population.
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