this Bank of Spain and Independent Financial Responsibility Institution (Airef) shares the impression that the Spanish economy behaved slightly better in the fourth quarter of 2022. more than expected a few weeks ago. In particular, the Bank of Spain, gross domestic product (GDP) may record “slightly positive growth” in the fourth quarter, The third place (0.2%) is in line with what was stated, as governor Pablo Hernández de Cos argued this Tuesday when he appeared before the Senate Budget Committee. At the same forum, Airef president Cristina Herrero stressed that the partial economic indicators in both Spain and the euro area are improving better than expected. Avoiding a negative GDP rate in the fourth quarter could help the Spanish economy avoid the risk of technical recession (a two-quarter negative GDP drop) that Airef didn’t ignore a few weeks ago.
Some confidence indicators, such as those related to purchasing managers or consumers, show weakness, according to analysis presented by the Governor of the Bank of Spain. “However, employment has maintained a more dynamic tone,” he added, as predicted by data on Social Security payers for the first half of November. “Indicators for the fourth quarter point to continued weakness in activity, which may experience a slight positive growth similar to the third quarter.“, summarized Hernández de Cos. As a result, according to the forecasts of the Bank of Spain, the current phase of weakness in economic activity is likely to continue into the winter months. “Activity is expected to recover starting in the spring. “A growing force driven by the gradual relaxation of energy markets, the restoration of international supply chains and the further deployment of European Next Generation EU funds,” said the governor.
Bank of Spain in December will once again adjust its growth forecasts and But the governor predicted that they would not be much different from those formulated in the October wave, which included 4.5%, 1.4% and 2.9% GDP growth rates for 2022, 2023 and 2024. In October, the average is predicted to be 8.7% in 2022, which will gradually increase to 5.6% in 2023 and to 1.9% in 2023.
More time to run European funds
After accumulating over the past two years in the Management of the Improvement Plan, The governor underlined the importance of proper application of European funds to support economic growth. In 2021, the Bank of Spain, according to its calculations, estimated the effect of the use of funds on GDP growth at about one point, which was later reduced to two-tenths. Likewise, the initial impact of 1.4 points projected for 2022 has already been reduced to 1 point. Until 2023, an increase of 0.6 percentage points is expected in economic growth due to European funds. In this context, and given the accumulated delay, the Governor of the Bank of Spain has called for longer deadlines for execution. “Insisting on the importance of meticulously selecting projects to be financed by the Next Generation EU programme, it is desirable to consider longer deadlines for program implementation given the administrative management challenges this entails and the structural focus of the programme,” Hernández de Cos said in the Senate.
Currently, Spain’s commitment to the European Commission in its Recovery Plan includes a commitment of 60% of the Recovery and Resilience Mechanism funds by December 2022. The limit for committing the remainder of the funds is set until December 2023. The deadline for requests for the final payment tranche (a little over 140,000 million grants and loans allocated to Spain) is set in the third quarter of 2026, subject to adherence to the milestones and targets set in this direction.