The Bank of Spain slightly improved its balance sheet. Forecasts for the Spanish economy for 2023. In its quarterly report released this Wednesday, it raised its Gross Domestic Product (GDP) growth forecast for 2023 to 1.6% (three-tenths of the 1.3% projected in December). At the same time, it significantly lowered its forecast by 1.2 points. average inflation For this year, up to 3.7% due to heavy moderation expected energy prices.
inflation foodBut it will remain high throughout the year: The Bank of Spain estimates that the rise in prices has not yet reached the ceiling, raising its forecast for average inflation for food to 12.2% for the whole of 2023. Despite the VAT reduction that came into effect for a large food basket in January 2023, the tax reduction was transferred to a very significant extent (90% to the final prices of the products), which was estimated in December (7.8%) and according to the estimates of the Bank of Spain.
Overall, the Bank of Spain now forecasts for 2023 more growth, less inflationmore jobs, lower unemployment and higher interest rates More than anticipated for the Spanish economy in December. As a result, the Bank of Spain’s 2023 growth forecast (1.6%) is still below the most optimistic forecast of the year. Spanish government (2.1%) and a sudden stop compared to the progress made in 2022 (5.5%).
Expectations released this Wednesday by the Bank of Spain were finalized in early March, before they were recently revealed. voltages in financial markets international. After the organization grew by 5.5% in 2022, GDP It will grow by 1.6%, 2.3% and 2.1% in 2023, 2024 and 2025, respectively. next to you Headline inflation This ratio, which was 8.3% in 2022 on average, is expected to decrease to 3.7% in 2023, to remain practically constant at 3.6% in 2024 and to decrease to 1.8% in 2025. key ingredient Cos.
GDP will grow 0.3% in the first quarter, accelerate in the spring and reach pre-pandemic levels in the second half of this year
Better-than-expected first quarter
What has happened since December for the Bank of Spain to improve its prospects? The first was an upward revision of growth (up to 5.5%) for 2022, which predicts a positive carryover effect for 2023, which started the year better than expected. In addition, a rapid correction was observed in energy prices. On the other side of the scales, rising interest rates, rising food prices and underlying higher levels of inflation are playing in the opposite direction.
In particular, the Bank of Spain makes a prediction. quarterly growth 0.3% in the first three months of the year, one-tenth more than recorded in the last half of 2022. The report said, “More positive than expected in December. In particular, it refers to indicators such as: membership Social Security or recovery of tourism activity.
push from the bow
“From spring Economic activity is expected to offer some degree of increased dynamism, aided by the anticipated reduction in inflationary pressures, the recovery of confidence and real incomes, the improvement of global supply chains and the intensification of the deployment of European funds. Next Generation EU. In any case, the “possible additional tightening in financial conditions” (due to the increase in interest rates) will play against the growth, and it will be possible to complete the transfer of the past interest rate hikes to TL. loans and mortgages. According to the course predicted by the Bank of Spain, GDP will return to its previous level. pre-pandemic level in the second half of this year.
The 2.3% growth forecast for 2024 represents a four-tenth cut from the forecast last December. The year 2024 will not be an inflation correction exercise, as this exercise will see the withdrawal of measures to moderate price increases extended until 2023, thereby reducing average inflation by only one-tenth in 2024, before falling back to 1.8% in 2025, at 3%. 6.
” job creation It will continue along the projection horizon in parallel with the course of the activity. hours worked (0.9% increase compared to the previous 0.5% estimate). It is now expected that unemployment rate In 2023, it will average 12.7% of the active population, two-tenths below the previous estimate.
deficit and debt
The macro aggregates table currently presented by the Bank of Spain, public deficit 4,6% of GDP in 2022; Increasing to 4.1% in 2023 and 3.5% in 2024, then to 4.3% in 2025, 3% target It will be protected by the new stability rules of the European Union. In 2025, “it will be added to the structural increase in spending – mainly pensions – and – to the reduction in income due to the partial reversal of collection surprises in 2020-2022 – to the expected cancellation of provisional taxes. Introduced in 2023”, the Bank of Spain report explains, banking , referring to recent taxes on energy and wealth.
For Public debt A slight decrease of 113.1% of GDP is expected in 2022; It rose to 111.1% of GDP in 2023 and 108.6% in 2024, then to 109.6% in 2025.