After strong growth last year, effectiveness Spanish economy it will slow down this year but will continue to grow around 2%. by latest spring forecast Presented this Monday by European Commission there will be growth 1.9% in 2023 and 2% in 2024In both cases, below the 2.1% and 2.4%, respectively, estimated by the Government of Pedro Sánchez in the 2023-2026 stabilization program update, but well above the winter projections of 1.4% for this year and 2% for the future. . Even so, the Community Manager doesn’t believe Spain can reduce it. public deficit It indicates that the deficit in public accounts will be 4.1% this year and 3.3% in 2024, due to lower income growth, below 3% in 2024, as predicted by the Spanish Executive.
The panorama that Brussels has drawn is optimistic. Spain will continue to grow over the next two years above the euro area average (1.1% and 1.6% in 2023 and 2024, respectively), at a higher rate than forecast only three months ago (five-tenths) thanks to labor market resilience, the impact of bailout funds, lower energy prices and a recovery in the economy. Tourism sector. In the first quarter of 2023, Spanish GDP increased by 0.5%, thanks to the improvement in the tourism sector, and from 2022, growth is expected to reach 1.9% for the year, thanks to a larger-than-anticipated transfer effect. Forecasts from Brussels show that consumption will recover, thanks to the development of the labor market and an increase in the real income of retirees and minimum wage workers.
It will also contribute to the smooth functioning of the economy. Next Generation Recovery Funds will continue to support investments. “Low expected import prices and reduced supply chain bottlenecks will help the investment goods sector recover, while continued mobilization of recovery and resilience plan funds will help sustain investment, particularly in non-residential construction. The sharp decline in the second half of 2022” supports the Commission’s analysis, which points to the positive impact of the expected fall in energy prices on competitiveness that will help international tourism recover to pre-pandemic levels and as additional factors. improve the results of the foreign sector.
All this will shut down Spain pre-pandemic space between the second and third quarters of the year. Among the downside risks to the outlook, community technicians cite the potential negative impact of tightening financial conditions for both households and companies. As far as households are concerned, the report points out that while most new mortgage loans are issued at fixed interest rates, the outstanding balance continues to be concentrated in variable rate loans.
As for the job market, Brussels’ diagnosis shows that behavior is good in 2022. permanent job creation and reducing the proportion of temporary workers in the private sector. This caused the unemployment rate to drop to 12.9% in 2022. With an unemployment rate of 12.7% in 2023 and 12.4% in 2024, this is a trend that will continue in the next two years. The terms recorded in 2022 say, “The rise in nominal wages is expected to accelerate in 2023, but will remain slightly below average annual inflation for this year.”
The new forecasts are also a slowing down inflation thanks to moderation in energy prices. According to Brussels, the extension of most of the measures taken by the Government last year to support the economy until the end of 2023 and the introduction of additional measures, including lowering VAT on various food products, will contribute to the progressive decline. Overall inflation, taken together, is expected to reach 4% in 2023 and continue to decline to 2.7% in 2024. may cause core inflation to remain high over the forecast period,” the Commission warned, adding that core inflation “may result in upside risks from rapidly adjusting higher wages, as well as extension of inflation provisions and an 8% minimum wage increase”.
The most negative note development of the public deficit. Despite continuing to fall to 4.8% in 2022, primarily thanks to “revenue robustness”, progress will not be as rosy in Brussels’ eyes as was predicted by the Government a little over two weeks ago. due to low income growth. “Available data for the first months of 2023 indicate continued dynamism in revenues, but a certain slowdown that is expected to continue throughout the year,” the commission said. The deficit in 2023 is impacted by the supposed complete suppression of temporary emergency measures taken by covid19, which is estimated to be 0.5% of GDP in 2022. In other words, the deficit of Public Administrations will be reduced, albeit more gradually. Up to 4.1% of GDP in 2023 and 3.3% in 2024. Public debtIt will continue to decrease, albeit gradually, to 111.5% in 2023 and to 110.3% in 2024.