Article published by José Alberto León Alonso in El Día on 01/17/16.
Although somewhat late than usual, in this article I make my economic predictions for 2016. What can we expect from the new year? I remember a joke that circulated around the Faculty of Economics when I was a student that said that “an economist is someone who will explain to you tomorrow why what he predicted yesterday did not happen today.” We economists certainly do not have great prestige regarding our forecasts, but some of us still take the risk of making them. At the end of each year, it is usually a recurring exercise for some economic magazines and business banks in the English-speaking world to dare to predict a series of specific events for the coming year and contrast the success obtained the following year. Since 2013 I have allowed myself to imitate them with between seven and nine correct predictions each year, out of a total of ten predictions. Last year only the prediction that the stock market would grow turned out to be unsuccessful. For 2016, these are my ten forecasts:
1. Spain's GDP will grow above 2.5% in 2016. Growth will slow from the 3.2% forecast for 2015, but will still remain important.
2. The Canary Islands will grow more than 2.5% during 2016. We predict that the growth of the Canary Islands economy will keep pace with that of the Spanish economy.
3. The number of employed people in Spain will exceed 18.5 million, according to the Active Population Survey, from the current 18 million employed people.
4. The number of unemployed in Spain will be reduced to below 4.5 million, from more than 4.85 million currently unemployed, so that the unemployment rate will be reduced below 20% for the first time since 2010
5. The number of employed people in the Canary Islands will exceed 825,000 people, a number of employed people that has not been reached since 2008.
6. The number of unemployed in the Canary Islands will fall below 300,000 people, also a figure that has not been known since 2009.
7. The public deficit will be higher than the objective of 2.7%. With unrealistic State Budgets for 2016 and the difficulties of forming a stable government and making decisions that may be unpopular, it is unrealistic to think that the path of reducing the public deficit will continue.
8. The price of housing will grow more than 5%. The housing market has already stabilized and the recovery will begin both in the number of homes sold and in prices.
9. The Spanish stock market will grow by 5% throughout 2016. Taking into account that it is currently losing 10% from the levels at the end of the year, it is still a risky forecast.
10. The price of a barrel of oil will reduce at some point during the year to below $20/barrel. The reduction in global demand due to the drop in economic growth, together with the divergences to control supply, is aligned in the direction of a continued fall in the price of a barrel of oil.
In summary, at the end of next year we will be better than now, and we have a tailwind due to the reduction in the risk premium and the fall in oil prices, but the growth rate will begin to slow down and unfortunately it will still take us a long time to reduce our high unemployment rates to acceptable levels. All of this, if political instability does not take away economic recovery, which we hope not.
