Positive balance for growth and employment in 2016 

The economy closed 2016 with a high rate of growth in activity and employment. In line with CEOE’s estimations, the Bank of Spain forecasted quarterly GDP growth at 0.7 per cent in the fourth quarter thanks to strong domestic demand, while the external sector could have a more neutral contribution to the GDP. With this rate, GDP growth for 2016 would reach 3.2 per cent, the same as in 2015. With regards to employment, the number of workers registered with the Social Security increased by 540.7 thousand people in December 2016, in comparison to the same month in 2015, and the average annual growth was set at 3.0 per cent.

Public Administrations, with a deficit of -2.6 per cent of GDP, points to a high probability of meeting the objective for 2016 (-4.6 per cent of GDP), after years of non -compliance. Finally, we should mention the significant rebound of inflation in December, up to 1.5 per cent. Even so, average inflation for 2016 will be set at -0,2 per cent.

For 2017, the Spanish economy will continue its recovery cycle, but at a slower pace (2.3 per cent) due to a depletion, and even a reversal, of the factors that have driven growth. The rise in oil prices will negatively affect costs. We must also take into account the impact that changes in the Corporate Income Tax will have on corporate investment. The Government will collect euro 4.3 billion with said change, instead of reducing non-productive public spending. At the same time, growth of household disposable income will be slower due to the lower creation of employment and higher inflation. All this in the midst of a foreign environment with considerable uncertainties.

Source: CEOE