BarcelonaThe Independent Fiscal Responsibility Authority (Airef) predicts a fall in economic activity during the summer. According to the organization’s latest gross domestic product (GDP, the indicator that measures economic activity) forecast, the Spanish economy will suffer a 0.2% decline between July and September, after a first semester with good economic figures.
Despite this, compared to a year ago the GDP will be 3.4% higher. In 2022 as a whole, Airef expects growth of 4.2% between January and December, one tenth less than the last forecast, published in April. Regarding the prices of consumer goods and services, he forecasts an average inflation of 7.8% this year. It should be borne in mind, however, that the data are still provisional, as they only include data from July, with data from the following two months coming out.
If the 0.2% drop is confirmed, the Spanish economy would close the third quarter of 2022 2.7% below the levels of the fourth quarter of 2019, the last before the outbreak of the pandemic. Spain is therefore the last of the large countries of the European Union that has not yet recovered the levels of activity before the pandemic, a milestone that, if Airef’s forecasts are met, the Spanish government and other international bodies, will not occur until at least next year.
In fact, the prognosis of the institution chaired by Cristina Herrero follows the line of the set of EU states, where several governments are preparing for a second half of the year with a sharp slowdown in the economy or, directly, with recession In fact, Germany’s GDP – considered the economic engine of the Old Continent – already stagnated in the second quarter, with 0% growth.
Worsening of the situation in Germany and France
The impact of the war in Ukraine, especially with the increase in the price of raw materials from Russia, is one of the main causes of the economic slowdown in Europe. In this sense, Germany is one of the most vulnerable countries because of the country’s strong dependence on Russian natural gas. A recession in Germany would have effects on most EU states, as it maintains close trade ties.
This Tuesday, new data on manufacturing and services from the Purchasing Managers’ Index (PMI, for its acronym in English) produced by the consulting firm S&P Global were released. According to the new data from August, activity continued to fall in the industrial sector and the service sector in Germany due to high inflation and interest rate hikes, which slow down credit to families and companies In addition, the PMI also shows a contraction of the economy in France this month, the first in the last year and a half.