The continuation of the current upswing in 2019 will continue to rest on the expansion of domestic demand (see Chart 1). Underpinning this will be: financial conditions that are expected to remain relatively favourable; an improvement in the financial position of households and firms; the gains in competitiveness observed throughout the recovery; and the strength of the employment creation process. It is expected that employment creation will slow this year, partly owing to the lesser pace of activity, but also to the increase of more than 22% in the national minimum wage. In any event, according to the Banco de España’s projections, the annual growth in numbers employed will stand at around 1.6% in 2019, providing for further reductions in the unemployment rate, to around 14% at end-2019 (see Chart 2). All told, there are grounds for a progressive slackening of economic growth in Spain over the coming years. These are, namely: the recent easing in global growth, which is proving BANCO DE ESPAÑA  3	 TESTIMONY BY THE GOVERNOR OF THE BANCO DE ESPAÑA BEFORE PARLIAMENT IN RELATION TO THE DRAFT STATE AND SOCIAL SECURITY BUDGET FOR 2019  FORECASTS FOR THE SPANISH ECONOMY: COMPOSITION OF OUTPUT GROWTH NET EXTERNAL DEMAND. CONTRIBUTIONS  GDP.
BANCO DE ESPAÑA  10	 TESTIMONY BY THE GOVERNOR OF THE BANCO DE ESPAÑA BEFORE PARLIAMENT IN RELATION TO THE DRAFT STATE AND SOCIAL SECURITY BUDGET FOR 2019  The third source of risk for projected revenues that I wish to highlight relates to the fact that the estimation of the revenue impact of the new taxes is subject to a high degree of uncertainty, given the absence of any data on how they have functioned in the past. Finally, caution should be exercised in relation to the potential delay in the entry into force of the measures accompanying the Draft Budget, which adds a further risk for expected revenues in 2019. 2.3  The government deficit target and the fiscal policy stance in 2019  Having discussed the spending policies and revenues of the Draft Budget separately I will now consider them together, in order to assess the uncertainty surrounding achievement of the deficit target of 1.3%. For this purpose, economists at the Banco de España have conducted a preliminary updating of the December projections, which I have already considered in detail. In particular, the impact on these projections of the revenue and spending measures that have been included in the Draft Budget since then is estimated, resulting in a general government deficit of around 2% of GDP in 2019, as compared with the Banco de España’s December projection of 2.4%. Moreover, the economic growth forecast would be revised down slightly, mainly as a result of incorporation of the impact of the tax measures.