Spain bumps up its growth forecast as tourism and exports thrive

Spanish Prime Minister Mariano Rajoy on Thursday lifted his government's economic growth forecast for 2017 to 2.7 percent from 2.5 percent due to a stronger than expected performance in the start of the year.

Spain bumps up its growth forecast as tourism and exports thrive
A couple celebrate after finding the exit of the biggest bush labyrinth of Spain in the northern village of Villapresente on April 9th 2017. Photo: AFP

“Recent data for the first quarter of the year, as well as national and international forecasts, have pushed us to revise our growth forecast,” he told reporters, adding the new forecast was “prudent” and “below the majority
of forecasts”.

The Bank of Spain earlier this month raised its 2017 growth forecast for the Spanish economy, the eurozone's fourth largest, to 2.8 percent from the 2.5 percent previously.

The International Monetary Fund on Wednesday lifted its forecast for the Spanish economy to 2.6 percent growth this year, slightly ahead of the United States and Britain, from 2.3 percent previously.

After a severe crisis sparked when a property bubble burst in 2008, Spain is on the road to recovery, and registered growth of 3.2 percent last year, double the eurozone average.

The Spanish economy has benefited from a record number of foreign visitors and strong exports, which are being boosted by the weak euro, and low interest rates and oil prices.

But the unemployment rate, while falling, remains high at 18.6 percent, the second highest level in the eurozone after Greece's.

Rajoy said growth will remain “very positive” in 2018 and 2019 and create 500,000 jobs per year.

His government's budget for 2017 predicts the unemployment rate will drop to 16.6 percent this year, down from a peak of 27 percent in 2013 at the height of the economic crisis.

READ ALSO: The road to recovery: Spanish growth outstrips most of Europe


Spain’s middle-class youngsters the most likely to end up poor across all EU

Spain leads the ranking of EU countries with the highest risk of young people ending up in poverty as adults, despite coming from families without economic difficulties.

Spain is the fourth EU country with the highest inherited poverty
Spain is EU country with most middle-class young people who end up poor. Photo: Jaime ALEKOS / AFP

Spain is also the fourth EU country with the highest rate of inherited poverty risk, according to Eurostat, the EU Statistical Office.

Data on intergenerational poverty indicates that there is a correlation between the financial situation of the household you grew up in and the risk of being poor when you reach adulthood and in Spain, there is a strong link. 

The latest statistics available from 2019 show that the at-risk-of-poverty rate for the EU was 23 percent among adults aged 25 to 59 who grew up in a poor financial situation at home when they were 14 years old. This is 9.6 percentage points more than those who come from families without financial problems (13.4 percent). 

READ ALSO: Spain’s inflation soars to 29-year high

How the situation in Spain compares with the EU

Spain has become the EU country with the highest risk of poverty among adults who grew up in families with a good financial situation  – 16.6 percent.

This was followed by Latvia with 16 percent and Italy with 15.9 percent.

That statistics also show the countries where it is less likely to be poor after growing up in households without economic difficulties. These include the Czech Republic (5.9 percent), Slovakia (7.9 percent) and Finland (8.5 percent).

The overall poverty rate in the EU decreased by 0.1 percentage points between 2011 (13.5 percent) and 2019 (13.4 percent), but the largest increases were seen in Denmark (1.9 points more), Portugal (1.8 points), the Netherlands (1.7 points) and Spain (1.2 points).  

On the other hand, the biggest decreases in the poverty rate were seen in Croatia (-4 percent), Lithuania (-3.6 percent), Slovakia (-3.5 percent) and Ireland (-3.2 percent).

READ ALSO: Spain’s government feels heat as economic recovery lags

Inherited poverty

The stats revealed that Spain was also the fourth country with the highest rate of inherited poverty risk (30 percent), only behind Bulgaria (40.1 percent), Romania (32.7 percent) and Italy (30.7 percent).

This means that children of poor parents in Spain are also likely to be poor in adulthood. 

The countries with the lowest rate of inherited poverty risk were the Czech Republic (10.2 percent), Denmark (10.3 percent) and Finland (10.5 percent).

The average risk-of-poverty rate for the EU increased by 2.5 percentage points between 2011 (20.5 percent) and 2019 (23 percent), with the largest increases seen in Bulgaria (6 points more), Slovakia and Romania (4.3 points), Italy (4.2 points) and Spain (4.1 points).

The biggest drops were seen in Latvia (-8.5 points), Estonia (-8.0 points) and Croatia (-2.3 points). 

The largest gaps in people at risk of poverty when they reach adulthood were in Bulgaria (27.6 percentage points more among those who belong to families with a poor economic situation as teenagers compared to those who grew up in wealthy households), Romania (17.1), Italy (14.8), Greece (13.5) and Spain (13.4).