The unfavorable outlook for the Spanish economy in 2024 is fading. According to experts gathered in the PwC Economic and Business Consensus for the first quarter of the year, there is a shift in opinion among panelists about the economic situation, abandoning the pessimistic conditions that prevailed at the end of last year. The number of people who rate the current situation well has increased from 32.6% to 45.9%, and more than 70% expect this trend to continue or improve in the second quarter of 2024. Next year, 82% estimate economic activity will experience a similar increase this year. Forecasts point to GDP growth of 1.7% in 2024 and 1.9% in 2025, if panel members' comments are averaged.
Like major analytics firms, respondents also predicted an improvement in GDP; 60% of participants They believe it will increase by 1.5% to 2.5% this year., and inflation will ease to 2% to 3% by the end of the year. However, challenges persist, such as a shortage of specialized labor and limited activity in non-tourism consumption.
Despite this optimism, managers have identified a clear problem preventing greater production or economic growth: according to 56.1%, “anticipated demand is insufficient to increase production”. 31.6% pointed out that the second reason is “Despite the need to increase production and installed capacity, the required skilled workers are not available”.
Moving down to the situation of households from macroeconomic variables, only 28% consider the situation to be good, while the majority rate it as fair (66%). 78% expect this trend to continue in the next quarter as well. Inflation and high interest rates that make loans more expensive could be behind these responses. According to those surveyed, household consumption 64% will remain stable and 22% will decrease. However, an increase in housing demand (16%) is expected to be 42%, and a decrease of 40%.
Regarding the economic-financial situation of the companies, almost half of the respondents consider it good (52%), while 48% rate it as average. No one considers her bad.
In foreign markets, more than twice as many respondents indicate they will improve (8.1% to 16%), while 76% believe they will remain stable. As for exports of goods and services, 28% believe they will increase (only 12.1% previously) and 19% believe they will decrease (compared to 37.4% in November 2023).
In terms of employment, those surveyed by PwC believe that the current positive trend will continue to increase, 50% expect it to remain stable and 31% expect a decrease.
54% of respondents expect inflation to be in the 3% to 3.5% range by June this year, while 34% expect it to ease to the 2.5% to 3% range. In December, the majority (56%) put it between 2.5% and 3%.
Despite this increase, Most managers indicate that their pricing policy will be fixed (62.5%), 35% expect to increase them and only 2% plan to decrease.
These responses seem to indicate that the Spanish economic situation is disconnected from the political cycle, which is dark and very complex, and could benefit from European funds and positive dynamics.
Rate is low
A possible reduction in interest rates is expected to be one of the drivers of positive forecasts. Currently, the ECB's intervention rate stands at 4.5% and is expected to remain at 4% to 4.5% by June 2024. In December, it is expected to drop to 3.5% or 4%. By June 2025, below 3.5%.
The evolution of interest rates is difficult to predict, but the current consensus points to three or four cuts of 0.25 points this year, as inflation continues to show signs of weakness and the ECB realizes the need to stimulate inflation. Some analyzes suggest that it is too early to assume inflation, It was 3.4% in January, will continue to fall, and there are those who expect a rebound that could have a negative impact on summer. However, the central bank's move will be important, as some believe the ECB will bring forward rate cuts if the central bank doesn't do so first.
