2023-06-23 11:40:53
The economy started the year with a stronger-than-expected boost despite skyrocketing inflation and rising rates. The Spanish economy advanced 0.6% thanks above all to the boost in exports and investment, but the review published this Friday by the INE confirms that household consumption also contributed to this growth one tenth higher than previously calculated.
GDP had slowed down in the last part of last year due to the drop in consumption due to high inflation, but even so it managed to close 2022 with growth of 5.5% and the INE now confirms that the last quarter advanced by 0.5 %, one tenth more than calculated. In the first part of 2023, the economy catches air and accelerates until it finally recovers the level of GDP prior to the pandemic, ours being the only country in the euro area that has yet to achieve it.
Annually, the economy advanced by 4.2%. They are four tenths more than what was forecast by the INE in its first estimate and 1.1 points more than in the last quarter of last year (3.1%). These very positive figures led the economic vice president, Nadia Calviño, to highlight that “Spain has already recovered its pre-pandemic GDP and that it is the fastest growing economy in the European Union, at a rate of 4.2%, four times more than average”. In an assessment sent to the media, Calviño indicated that a very important part of this growth is based on “the dynamism of employment”, with the creation of 426,000 full-time jobs in the first quarter.
But before looking at employment, it is important to highlight exports and investment as the main engines for the economy in the first part of the year, dragged down by the strong recovery in tourism. Foreign sales increased by 9.2% from January to March to reach 132,000 million euros, a record high. But investment is also through the roof (it grew by 1.1% after two quarters of decline), especially thanks to the boost from European funds and the incipient slowdown in inflation, especially in the energy component.
The negative side is observed in household consumption, which sank 1.3% compared to the last quarter, which reflects the suffering of families due to high prices and adds two consecutive quarters of setbacks. Of course, compared to the first quarter of last year, household consumption grew by 1.6%, still the lowest rate in two years. Given inflation, households spent 6.5% more than in the same period in 2022, but could only buy 1.5% more than then.
Public spending, in addition, contracted 1.6% this first quarter, the biggest decline since the end of 2021. At an annual level, it grew 1.4%, 1.1 points more, while investment grew only 07 %, its lowest rise since 2021. But the pull of the economy came from exports, which accelerated their growth three points annually, to 10.2%. Imports also rose but to a much lesser extent, 3.3%.
In fact, the general director of the Economy of the Bank of Spain, Ángel Gavilán, pointed out a few days ago a certain “cooling off” of the economy during the second quarter, especially due to the high prices that weigh down consumption and cause families not to notice yet the progress of the macroeconomic figures that are being registered. Thus, the inflation rate will be reduced, mainly due to the drop in energy, but food will continue through the roof. Specifically, the agency calculates that food will end the year 11.5% more expensive than in 2022. It is seven tenths less than what was forecast in March but still at a very high rate. The pressure will drop next year, when food inflation will be 4%.
Despite these data, the Bank of Spain predicted that the economy could grow another 0.6% from April to June. In its forecasts, the supervisor considers that the Spanish economy will advance by 2.3% this year, two tenths above even the Government’s estimates. These are forecasts similar to those being given by other organizations, such as BBVA Research (2.4%) or the OECD (2.1%).
426,000 more jobs
Economic growth is based on a base of employment that continues on a positive path. And it is that despite losing 11,000 jobs in the first quarter according to data published by the EPA, it was a lower decrease than in the same period of other years. The INE data for this Friday indicated that in the first quarter compared to the previous quarter, employment in hours worked increased by 0.4%, five tenths more than in the last quarter of 2022. This rate is of a lesser magnitude in the case of jobs of full-time equivalent work (0.1%, similar to that of the fourth quarter) due to the lower growth of average full-time days (0.2%) compared to the growth of hours worked.
But on a year-on-year basis, full-time jobs increased by 2.3%, three tenths more than in the fourth quarter, which means that 426,000 jobs have been created in one year.
The professor of Economics and Business at the European University, José Manuel Corrales, tells this newspaper that “it is evident that we are in an economic slowdown” since 2023 will be worse than 2022, “but this does not mean that we are going to enter a recession”. . The expert assures that the GDP can improve depending on the evolution of the war in Ukraine, the commercial distribution and how emerging countries like China and India are doing.
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