Bank of Spain Slashes Deficit Forecast
March 30th, 2011
The Bank of Spain has slashed its forecast for this year’s public deficit from last year, due to the sharp government spending cuts.
Austerity measures and structural reforms have eased concerns even as neighbour Portugal is seen on the verge of asking for aid. The public deficit for this year would be 6.2 percent of gross domestic product, the central bank said, down from a previous forecast of 8.9 percent of GDP.
“The 2010 public deficit was 9.2 percent of GDP…which shows the measures agreed in the 2010 budget and, above all, the packet of adjustments passed in May of last year have effectively reversed the public deficit’s rising trend,” the Bank of Spain said in its monthly report.
Spain’s Prime Minister Jose Luis Rodriguez Zapatero told Parliament that new measures aimed at further reining in the deficit would be approved in early autumn.
The central bank’s deficit projections remain higher than the government’s own, who are expecting a deficit of 6 percent this year and 4.4 percent of GDP next year.
The central bank’s growth forecasts were also slightly less optimistic than the government’s at 0.8 percent in 2011, compared to the official forecast of 1.3 percent, and, for next year, 1.5 percent compared to the government’s 2.5 percent.
The bank echoed the government’s own expectations that the economy will produce net jobs by the second half of this year. From Reuters.
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