MADRID - The Spanish economy would grow by 1.2 percent in 2014 according to economic predictions published on Wednesday by the Bank of Spain.
The Bank of Spain reported that the Spanish economy would expected to grow by 1.2 percent in 2014 and by 1.7 percent in 2015 thanks to the recovery of the country's domestic demand, which was seriously affected by the economic crisis.
The Bank expects domestic demand to increase by 0.3 percent in 2014, a figure that will improve in 2015. Meanwhile, external demand would increase by 0.8 percent in 2014, decreasing slightly in 2015.
Private consumption would increase by 1.1 percent in 2014 and by 1.2 percent in 2015, which would cause a fall in families' savings rate to 9.5 percent this year. It would increase by 0.2 percent in 2015, according to the Bank.
Exports are expected to continue increasing, by 5.1 percent this year and by 6.1 percent in 2015, while imports would increase by 3 percent in 2014 and by 4.4 percent in 2015.
The Bank of Spain highlighted that uncertainty around Spain's financial system was disappearing and added that the situation of the country's labor market was improving.
The Bank said that the unemployment rate would fall to 25 percent in 2014 to continue falling to 23.8 percent in 2015. At the same time, employment would increase by 0.4 percent in 2014 and by 0.9 percent in 2015 thanks to wage moderation within the private sector and more flexibility in the country's labor market.
However, employment within the public sector is expected to continue falling.
The Bank expects Spain to meet the 2014 deficit target of 5.8 percent required by Brussels, however it would not meet 2015 deficit target that would stand at 5.5 percent. The Bank also predicted that Spain's fiscal deficit stood at 6.6 percent in 2013, slightly above the required 6.5 percent.
Predictions published by the Bank of Spain were more optimistic than those of the Spanish government, European Commission (EC) and the International Monetary Fund (IMF).
The Spanish government expects Spain's economy to grow by 1 percent in 2014 and by 1.5 percent in 2015. The EC also expects the Spanish economy to grow by 1 percent in 2014 and by 1.7 percent in 2015 while the IMF expects it to grow by 0.6 percent this year and by 0.8 percent in 2015.
