For the second time in two months, the Government has made minor adjustments to its annual macroeconomic data. The Minister of Finance, Cristóbal Montoro, presented yesterday the new stability objectives for 2013-2015 and the government's non-financing costs spending limits for the year ahead. The main conclusion to draw from the data that the Minister unveiled is that Spain is going to be in a recession in 2013. GDP is predicted to drop by 0.5% instead of going up by 0.2% as originally believed.
Montoro did point to better-than-expected GDP figures for the rest of 2012. Spain is expected to end the year at 1.5%, which is two tenths of a point better than predicted. This raises its 2013 spending cap to 126.792 billion euros, more than 9 billion of which it will spend servicing debt.
Unemployment figures will be the biggest uncertainty. According to Montoro, unemployment will reach 24.3% in 2013. This is an optimistic forecast if we take into account that by Q1 of this year we had already hit 24.4%.
The projection targets are important, but hitting them won't substantially change the country's poor economic standing. What's worse, the forecast could worsen further if regional governments don't meet their obligations, raising the VAT doesn't bring in higher tax revenues or a full intervention takes place.
