The outlook for the Spanish economy has been deteriorating steadily since the end of last year, as shown by the Bank of Spain’s third downward revision of growth forecasts. The body calculated yesterday that the Spanish GDP will rise by 4.1% this year, slightly below what the Government and the consensus of analysts estimate (4.3%) and lower than what the same institution predicted in the April (4.5%) and December (5.4%). Since its forecast last September (6.3%), the cut is already 2.2 points.
The inflationary spiral, which began last summer and was exacerbated by the invasion of Ukraine, explains this. The supervisor has moderated the average annual inflation forecast for 2022 from 7.5% to 7.2% due to the entry into force of the Iberian mechanism to reduce the electricity bill (which will be reduced by 0.5 points l ‘CPI this year). But it has “significantly” raised its estimates for 2023 (from 2% to 2.6%) and 2024 (from 1.6% to 1.8%).
Widespread rise
Rising prices are thus being “generalized” to all kinds of products and services, so that the forecast for core inflation – which does not take into account energy and fresh food prices – stands. now at 3.2%, 2.2% and 2%, respectively (2.8%, 1.8% and 1.7% in April). “The intensity and persistence of the rise in prices continues to be surprisingly on the rise,” warned the Bank of Spain.
However, the institution has improved its forecast of job creation measured in terms of hours worked for this year (from 1.9% to 4.6%) thanks to the positive data for the first quarter, although it has reduced those of 2023 (from 2% to 1.5%) and 2024 (1.6% to 1.1%). Their estimate for unemployment (13%, 12.8% and 12.7%, respectively) is also better than in April (13.5%, 13.2% and 12.8%). As for the public deficit, it now expects a more accelerated reduction, from 6.9% in 2021 to 4.6%, 4.5% and 4.2% (5%, 5.2% and 4.7% previous) thanks to the also surprising evolution of income.
Uncertain stabilization
The macroeconomic situation, in fact, seems to be stabilizing. The risk of recession is now “farther away” than in April, although not entirely ruled out, and the forecast for GDP for the next two years (2.8% and 2.6%) has barely changed. .
The decrease of 0.4 points in the forecast for this year is mainly due to the fact that the growth data for the first quarter (0.3%) was significantly lower than expected for the omicron variant of coronavirus and the invasion of Ukraine. However, this effect has been partially offset by better-than-expected performance in the sectors most affected by the pandemic, such as catering and tourism. “In recent months, economic activity seems to have increased its dynamism,” said the supervisory body.
In any case, the pre-pandemic GDP level will not be reached until the second half of 2023, in principle the third quarter, when last September was expected to pass now, in mid-2022. there are no additional disturbances, but there are high additional disturbances every week, ”warned Ángel Gavilán, director of economics and statistics at the Bank of Spain.