The Commission forecasts for Spain, Italy and Ireland
The European Commission’s spring economic forecast foresees a continued recession in the eurozone this year, with projected growth of -0.4%, after -0.6% last year. The main drivers of the downturn are private consumption, -0.9%, and investment, -2.6%. The only one positive factor was exports, which were up 2.2% eurozone-wide. Unemployment is projected to rise from 11.4% in 2011 to 12.2% this year.
As a metric of austerity, here is the aggregate eurozone primary balance:
Most of the austerity has taken place during 2011-2013. For the full forecast, see here. We picked out some of the highlights for Spain and Italy.
For Spain, the forecast for GDP is -1.5%, slightly worse than the Spanish government’s forecast. The unemployment rate is projected to reach 27% this year, falling marginally to 26.4%, but with zero employment growth. The current account balance is forecast to have swung from -0.9% to +1.6% this year, and to 2.9% next year. Interesting is the forecast for the structural deficit: after an improvement from -5.5% to -4.4% this year, it is projected to rise to -5.5% next year.
The forecast for GDP growth is -1.3% this year, with a big swing in the current account balance from -0.5% to +1% this year. The structural balances improves from -1.4% to -0.5%, with gross debt rising to 131.4% in 2013 and 132.2% in 2014.
The spring report expects Ireland’s deficit to reach 7.5% of GDP this year, higher than the February estimate of 7.3%. The Commission cites the rejection of the Croke Park wage agreement by unions, higher than expected costs involved in liquidating the Irish Bank Resolution Corporation and the payment of dividends on the government’s preference shares in AIB as risks to the Irish deficit reduction plan this year, according to the Irish Times.