The OECD has further reduced its growth forecast for spain in 2023, compared to the one he gave two months ago, to leave it at 1.3%, clearly below the 2.1% expected by the Government, although it will be one of the highest figures in the euro zone and in the European Union.
In its Outlook report published this Tuesday, the Organization for Economic Cooperation and Development (OECD) expects a recovery, but a very limited one, in 2024 when activity should increase by 1.7%, again a much less optimistic statistic than the 2.4% projection of the Executive of Pedro Sánchez.
At the end of September, when he released his interim report, he had calculated that the gross domestic product (GDP) of Spain would increase by 1.5% in 2023. And it must be taken into account that this already meant a downward revision of seven tenths with respect to their anticipations in June.
In comparative terms, Spain’s growth rates next year are going to be superior to most of the large developed countriesin particular to the other Europeans, even more affected by the war in Ukraine.
Beyond the fact that activity is going to fall in the United Kingdom (-0.4%) and in Germany (-0.3%), growth in Spain will be clearly higher than in Italy (0.2%), France (0.6%), the United States (0.5%) or Canada (1%).
Yes, developed countries that are geographically and economically far from the conflict between Russia and Ukraine, such as South Korea (1.8%), Japan (1.8%) or Australia (1.9%), not to mention emerging economies such as China (4.6%) or India (5.7%).
Pre-pandemic GDP recovery in 2024
Because of this slowdown, Spain should only recover at the beginning of 2024 the level of GDP that it had at the end of 2019, before the covid crisis broke out. And in that it differs, for the worse, from the other major world economies.
One of the most worrying elements, and which the authors consider should be the top priority of economic policy now, is the control of the inflation. Although there are signs that it peaked in Spain in the summer (it has gone from 10.7% year-on-year in July to 7.3% in October), the OECD believes that it will remain at a high level for the long term.
The organization estimates that, after an average inflation of 8.6% this year, it will remain at 4.8% in 2023 and will continue at that same level the following year, when a significant drop is expected in the euro zone. (from 6.8% in 2023 to 3.4% in 2024).
The only good news from this semi-annual study for Spain is that, if your projections come truethe expansion of the Spanish gross domestic product (GDP) this year will be 4.7%, three tenths more than what the OECD itself had anticipated in September and six more than what it announced in June.
The savings accumulated during the pandemic are one of the pillars of activity at this time through consumption, as well as the European Next Generation funds for public investment.
Wages have lost a lot of purchasing power
The other side of the coin is that the demand will deteriorate due to the impact of inflation: the Real wages have lost around 5.5% of their purchasing power in one year in Spain until the third quarter, one of the highest percentages in OECD members.
In addition, the increase in interest rates of the European Central Bank (ECB), which will continue in the coming months to try to stifle inflation, will cool down private investment and consumption, as well as the housing sector, although it is not expected to have as strong an impact there as in previous crises that the percentage of variable rate loans has decreased notably.
The economic slowdown of the next two years, at least this time, should not translate into a higher unemployment ratesince the authors of the study believe that in 2023 it will remain stable at 12.9% while in 2024 it will drop even two tenths to 12.7%.
Regarding public accounts, the deficit will decrease moderately, going from the 4.9% expected this year (one percentage point more than what the Government anticipates) to 4.2% in 2023 and 3.7 % in 2024.