Spain is sinking Economic and inflationary crisis It affects the whole of Europe and has left the country in turmoil with export and consumption levels at historic lows. In the last few hours, the Spanish government has sent the European Commission Updating your economic and financial forecastsAn upward revision, though reducing GDP growth to 2024.
He Budget Plan for 2024 The Ministry of Economy predicts 2.4% of GDP in advance For the rest of the year, three-tenths more than the previous macro table published. Looking ahead to next year, the correction is downward Estimated 2% (Four-tenths less than his previous forecast).
The reason for all this GDP series for late 2022 and early 2023 Carried out by INE in September. Let’s see how GDP is recorded 0.5% variation In the second quarter of 2023 compared to the previous quarter in terms of volume.
Management’s optimistic forecasts are consistent with statements made several months ago Pedro Sanchezwho promised that Spain’s economy “It Goes Like a Motorcycle”. In the first quarter of 2023, Spanish GDP recorded a variation of 0.6%, which represents a year-on-year economic growth of 4.2%. However, if the 2019 data (pre-pandemic) is taken as a reference, it is Spain did not grow at all in four years It has already stagnated in 2017 figures.
GDP projections by institutions
AIREF
Spain is recovering, albeit at a slower pace than other European and global economies. The government’s projections are focused Compulsory consent It gives you Independent Authority for Fiscal Responsibility (AIREF). Here’s how the quarterly interim rate looks at 1.5%.
GDP at market prices is in the third quarter An annual rate Volume 1.7%2.2% from the second quarter and 4.2% from the first quarter of 2023.
For AIRef, growth in national demand remains optimistic, mainly due to the tightening of financial conditions in the economy, the withdrawal of measures implemented to curb inflation and the decline in business confidence.
Likewise, there is a Stability of inflationThe private consumption deflator will increase to 3.6% in 2024, nearly double the initial estimate of 2%. Thus, the fight against inflation is expected to last till 2025.
The economy is stagnating, and it looks that way Employment generation. The government estimates that employment will increase by 2.2%, a tenth higher than the initial forecast, but cuts the growth rate to 1.5% for 2024. The Unemployment forecast will be 10.9%. For its part, the Productivity per worker 0.5% increase. Productivity in Spain is currently 63% of that of Germany.
Predictions are out in the last few hours GDP growth estimates for Extremadura. They are located Norm 2% volume in 2024Just above the 60th percentile of confidence groups in the AIREF rating, this demonstrates the presence of downside risks.
Bank of Spain
For his part, the Bank of Spain It predicts GDP growth of 1.8% in 2024. The company calculates GDP will grow by 0.3% by the end of the third quarter of 2023As a result of decline in exports, interest rates and high inflation.
As Spain will integrate One of Europe’s most dynamic economies, there are no risks of recession on the horizon. The service sector will continue to be the driver of the economy. However, they predict that inflation will have a rebound effect in the first quarters of next year, peaking in late 2024 or early 2025.
International Monetary Fund
For its part, the International Monetary Fund lowered its estimates to 1.7% in 2024. Maintains growth forecast for 2023 at 2.5%. Annual growth in the last quarter of the year is expected to be 1.6%, two-tenths lower than the IMF’s initial estimate.
Scarcity situation
Another factor to take into account is that the Finance Ministry is maintaining its May deficit projections. So, wait A negative balance of 3.9% of GDP by 2023, dropping to 3% at some point in 2024. In this sense, The extension of anti-inflationary measures is not taken into account Such as reduction of VAT on basic food items or electricity.
Thus, VAT bonus They represent the structural initiative requested by the European Commission regarding financial rules. These are preferential tax incentives An impact of 6.5 billion euros. And if the government does not withdraw the tax subsidy, Net primary spending will increase by 3.4%.
Consumption recovery
expected Household consumption develops worse than expectedreduces significantly Household savings rate. In the new macro law, the Personal consumption 1.5% in 2023 and 2.5% in 2024. For its part, the government is downgrading growth projections General consumption to 0.2%, below the 0.9% calculated so far.
For its part, the External demand It will also slow Spain’s growth. Exports are expected to grow by 2.4% and imports by 3.3% in 2023. External demand subtracts 0.2 points from GDP.
