MADRID“The risks surrounding the forecasts [econòmiques] of spring have materialized. “Thus begins the summer update of the European Commission’s forecasts published this Thursday. The result: even more rampant inflation and a slowdown in economic growth.
The economic consequences of the war in Ukraine have left in the wrong place the forecast of price escalation that Brussels drew in the spring. In the case of Spain, the Commission’s economists now place inflation at 8.1% for 2022, almost two points more than the index estimated just two months ago (6.3%). The jump is important: the price increase forecast increases by 28% in just two months.
Despite this, the rate remains below that expected for the whole of the European Union and which economists place at 8.3%. The reason for all this is the constant increase in energy prices, and in particular gas, but also food. A situation that has ended up splashing other services and goods, assumes the Commission. Therefore, in the case of Spain, the EU executive recognizes once again that Spaniards will inevitably lose purchasing power, because their wages will not grow as much as prices do.
This upward revision of the increase in prices leaves far behind the Spanish government’s inflation estimate (6.5%), but also that of bodies such as the Bank of Spain and Airf. In the spring, the first placed inflation at 7.5% in 2022, while Airf placed the consumer price index (CPI) at 6.2%. However, both agencies have already anticipated that there will likely be upward revisions. Looking ahead to 2023, the Commission expects to recover “stable” inflation rates, although the aspiration to reach 2% is not near. Across the European Union, prices would start to fall in early 2023 and would fall below 3% “as supply constraints fade and commodity prices fall,” the Commission notes. In Spain, the inflation rate forecast for 2023 stands at 3.4%.
Economic slowdown
While the Commission maintains that economic growth will be “propped up”, it acknowledges that the pace of activity will be more “moderate” despite a “promising” tourist summer season. The increase in prices, combined with bottlenecks and the containment of consumption resulting from a tougher monetary policy, means that Brussels will maintain economic growth of 4% in Spain in 2022. Looking ahead to 2023, growth would be 2.1%. In both cases, however, the rebound in GDP is better than expected for the European Union as a whole (2.7% in 2022).
The forecasts, however, are still slightly less pessimistic than those presented by the Spanish government some time ago. The department led by Vice President Nadia Calviño places GDP growth in this year 2022 at 4.3%, and 3.5% in 2023. Finally, one of the positive notes of the Commission continues to carry the labor market, which according to European economists will remain “strong”.
Caixabank lowers forecasts
A diferència de la Comissió, Caixabank Research -el servei d’estudis de l’entitat d’origen català- ha rebaixat aquest dijous les previsions de creixement per a l’economia espanyola, però per al 2023. De cara a l’any que comes, the bank expects Spanish GDP to grow by 2.4%, 1.4 percentage points less than the last forecast.
Despite the reduction, Caixabank Research considers that the Spanish economy maintains “a positive inertia” and a “good pace” of growth, despite the “adverse context” at the international level. Specifically, at the moment the recovery of tourism and the good pace of consumption of families are the two main pillars of economic activity, which has a positive impact on the labor market, according to the entity.