2023-12-27 11:24:30
The Spanish economy will moderate its growth in 2024 affected by the headwind that blows inflation, the rise in interest rates established this year by the European Central Bank (ECB), the price increase and the slowdown in the eurozone, Inter alia. A macroeconomic scenario which is conditioned, today, by a geopolitical context in which the Russian invasion of Ukraine and the conflict in the Middle East throw uncertainty to the markets.
To know the keys to current events and decipher how the new year looks for Spain and the world, El Periódico de España and El Periódico, with the sponsorship of CaixaBank, organized a meeting with expert voices in Madrid under the title Perspectives 2024: Economic challenges.
Judit Montoriollead economist de CaixaBank Research, was in charge of presenting a new report prepared by the bank’s analysis service. The specialist assured that 2024 “will be marked by the digestion of a few years of complex situation“.
He stressed that “the energy market rebounded very abruptly in 2022, and that led to some prospects for this 2023 quite negative“. And he explained that “as the year has gone by yeThese tensions have been subsidingthey have led us to wait a much more positive year than we had predicted.”
Judith Arnal, senior researcher at Center for European Policy Studies (CEPS) and of Elcano Royal Institutestressed that “we are in a moment of slowdown in the economy” and agreed with CaixaBank Research in placing the growth forecast for Spain this year at 2.4% and next year, around 1.5%. “It is undeniable that in 2023 Spain has resisted better than the entire euro zone due to the sectoral composition of our economy, which is very focused on the service sector already one less dependence on the Chinese and Russian economies“he added.
Luciana Taft, consultant in the Economics and Markets Area of International Financial Analysts (AFI), also pointed to a “moderation” of the market. “No one would have thought that we would be experiencing a soft landingwith risks and dark clouds on the horizon, but in a quite comfortable way,” he added.
Juan Pablo Riesgopartner responsible for EY Insights, highlighted the opportunity that the European funds Next Generation with a view to carrying out reforms and investments. The EY research service specialist maintains that “there is a lot room for improvement in investment absorption (that facilitate this aid)”.
María Jesús Fernández, Senior economist in the Economic Situation area of Funcas, stressed that, in terms of long-term prospects, “the current situation of the economy is positive taking into account the circumstances we have gone through”, but explained that “there is a very worrying situation in the background that has to do with the lack of productivity in Spain and gap in GDP per capita with respect to the European Unionwhich instead of shrinking is widening”.
CaixaBank Research is convinced that Consumption will be another of the pillars of growth for next year. “The upward trend in consumption is related to factors such as demography (a sharp increase in population), the temporary rate (a reduction of this type of contracts) and the household savings rate (better than expected),” Montoriol said.
Judith Arnal was convinced, in this regard, that “growth is going to come above all on the side of domestic demand and not so much from external demand, and that internal demand is going to support private consumption“.
Inflation and interest rates
Luciana Taft affirms that the fight against inflation “is still far from won” and it will continue to be complicated. The AFI expert believes that “the expectations implicit in different market instruments regarding inflation in the medium term are above 2%.”
María Jesús Fernández pointed out that the inflation rate will be affected by the withdrawal of anti-inflation measures. “There is going to be a step effect when the reduction of VAT and tax on energy products“he remarked. Juan Pablo Riesgo agreed with this analysis and emphasized that “this trend towards slowdown in inflation is evident.”
Judit Montoriol highlighted that “the disinflation path that has already begun will continue in 2024“. As a consequence of this and in relation to monetary policy, “at CaixaBank Research we foresee a first cut in interest rates in September next yearwhich can possibly be brought forward and, if the inflation data continues to be so positive, it could even be before summer“, pointed out Montoriol.
“It is very likely that they have reached the peak; the question now is How long will they stay at this elevated level? to ensure that inflation converges to 2% in the medium term,” he concluded.
Savings and employment
María Jesús Fernández wondered “How is it possible that employment is behaving in such a surprisingly positive way?“, and argued that, currently, it is “a global phenomenon that is helping to sustain family incomes and to prevent delinquencies from increasing”.
The Funcas specialist explained that “although we have experienced the most intense interest rate rise in the history of the eurofamilies have been able to sustain consumption and, at the same timeincrease the savings rate“and pointed to the employment creation as “one of the positive points in the recent evolution of the Spanish economy”.
Luciana Taft emphasized family savings. “One of the underlying problems is that we don’t save“he remarked. Taft lamented that in Spain “we don’t have financial education and we don’t have provisional savings“and only during the pandemic did families get save “forcedly.”
Judit Montoriol affirmed that the Job creation “has been very positive” in Spain. “The latest data already point to a more moderate job creationbut they are still positive, and so we also expect them for next year, with around 300,000 more employed people in 2024“, he stressed.
Judith Arnal joined this idea and stressed that the strength of employment explains much of the “soft landing” that the economy is experiencing. “The Achilles heel of the Spanish labor market is the unemployment rate, that makes it difficult to have a good vocational training system and that there is qualified population for jobs that will be required in the future,” he added.
At this point, Arnal emphasized the information and communication technologies (ICT) sector, which “is having a great impact on job creation.” “Jobs are being created in sectors of high added value such as technological or scientific“he highlighted.
Juan Pablo Riesgo (EY Insights) warned that “we live in this turbulent moment of transformation and transition in which companies need reconfigure your production systems y skilled labor to do it.” The expert pointed out, in this regard, that it is crucial to “work to improve productivity.”
On the other hand, Judit Montoriol recalled that “we are in a more debt-free economywith really low debt levels that have had a clear impact on families and businesses”, although he acknowledged that it has been “lower than what we had had in previous cycles.”
María Jesús Fernández (Funcas) assured in this regard that the debt level of Spanish companies is lower than that of European companies and, therefore, “the rise in interest rates must have affected the accounts of Spanish companies to a lesser extent.” The economist predicts that, by next year, there will bereduce the structural deficit “so that the public debt enters a path of sustainability“.
For Juan Pablo Riesgo, demand is essential. “Conceptually there is a great need for investment, energy transition and digital transformation and companies have the will to do it,” he said.
Help ‘Next Generation’
The experts discussed the European Union recovery fundsaid that today represents a great challenge for companies and whose execution entails difficulties and develops somewhat slowly. Luciana Taft assured, in this sense, that she is “betting heavily on European funds” but acknowledged that “It’s taking a lot to absorb them.”
Juan Pablo Riesgo pointed out that from the moment a political decision is made to promote an investment until it becomes savings, it is the companies that use their own resources. “We are in a context of crisis in which we must boost that investment and in which we are risking the future. It is very important that these funds end up flowing to accompany the Spanish economy and companies when it comes to address this transformation because there are many challenges and risks, but there are also big opportunities“he stressed.
Riesgo also stressed that in order for the expectations in the Next Generation funds to be met for next year it would be good modify the way these investments are executedwhich “clearly “they are taking a long time to arrive”.
María Jesús Fernández was convinced that European funds “will allow there to be a inverter impulse at the same time that our public accounts are consolidated”.
The representative of Funcas expressed, in this same direction, her concern about “theInvestment in capital goods, which is stagnant below pre-pandemic levels” and stated that “fiscal consolidation needs to occur” in Spain.
Luciana Taft (AFI) stated that we are betting on European funds but that, for the moment, “they are a little asleep.” He admitted that “it is being done slowly and it is costing a lot to absorb them not only in Spain but in other countries.”
Tourism and real estate
Judit Montoriol highlighted, in the final stretch of the debate, what else important lever of the Spanish economy has been and will continue to be The tourism. “Our prospects for 2024 the thing is The tourism sector continues to grow and contribute to the economybut with more moderate growth rates,” he stressed. The CaixaBank Research specialist concluded that The tourism sector must focus on the search for “quality and sustainability.”
Montoriol also referred to the Spanish real estate market which, according to the entity’s data, “is resisting the rate hike very well“. The data in the report reflect that “the housing prices will continue to record positive growth and a public deficit that will be gradually reduced”.
#economy #maintain #soft #landing