Labour market to drive Spain’s economic growth
The Spanish government has sent a report to the European Commission assessing the local market. According to the document, the country is working to reduce its budget deficit and curb inflation. In addition, the Spain’s economic growth is expected in 2024, driven by recovery processes in various sectors.
The authorities noted that the economy has been performing well since 2021, following the downturn during the pandemic. The same pace will be maintained in 2023. GDP growth should reach 2% in 2024, above the EU average. The main drivers of growth in the Spanish economy are:
– increased activity in the labour sector;
– household wealth accumulation;
– interest from foreign investors;
– the implementation of the economic recovery plan.
At the same time, two factors – geopolitical conflicts and EU monetary policy – will have a direct impact on the local market in the near future. The latter, on the one hand, contributes to curbing inflation and, on the other, reduces economic activity not only in the Spanish market but also in Europe as a whole.
Revenue forecasts in the budget
2024 budget development follows the inertia scenario, which does not imply introducing new measures. However, they may be introduced in the future if necessary. The government intends to revise the pension accrual this year. This will make it possible to maintain purchasing power at a certain level despite the instability of the global energy market.
As for public administration revenues, their share in GDP will reach 42%, with an increase of 0.1% compared to 2023. Total tax revenues should reach €382.8 billion, an increase of 7.5% compared to previous figures. According to the authorities, the main drivers of this increase are rising employment and higher pensions.
The government plans to increase social contributions by 6.4% in 2024 due to the improvement in the labour market and the implementation of the pension reform.
Deficit and debt projections
One of the government’s main targets is to reduce the budget deficit by 3%. The regional deficit should be 0.1% lower, with the rest of the reduction coming from the central government. In addition, the good dynamics of the Spanish economy will reduce the dependence of the external debt on GDP. It is worth noting that this ratio is already 108% (the country reached 110% earlier than planned). The authorities hope to reduce this to 106.3% in 2024.
According to financial analytic Chaslau Koniukh opinion, the government is paying particular attention to implementing sustainable development points, which implies the transformation of several sectors.
