expansion economy The Spanish economy will slow in the second half of the year due to the decline of the tourism sector, weakening economic activity with major trading partners, the impact of tighter financial conditions and a less dynamic labor market. Despite this scenario, the European Commission foresees a positive near future for the Spanish economy. Revises 2023 forecasts upwards. According to this new predictions summer temporaryThe economy will grow this year three tenths more more than predicted just three months ago, 2.2% compared to 1.9% This situation, predicted in May, makes the country one of the main economic engines of the Eurozone.
According to the new update, which includes growth and inflation data only for the six largest economies of the European Union, Spain will grow more than twice as much this year as the previous year. France (1%) anyone Italy (0.9%) and far above Netherlands (0.5%), Poland (0.5%) And Germany (-0.4%) will close the year negatively. This development caused Brussels to revise its growth forecast downwards for this year in the EU (from 1% to 0.8%) and the euro area (from 1.1% to 0.8%). According to Brussels, this is due to the weakness in domestic demand, especially consumption, due to rising prices of goods and services and the impact of tight monetary policy. Indicators point to a slowdown in economic activity over the summer and coming months, with industrial weakness continuing and services momentum weakening despite a strong tourism season in many parts of Europe.
Similar 2024Brussels continues Forecast for Spain is 1.9%Eight-tenths less than Poland (2.7%), but still far above the rest of the major economies Eurozone: France (1.2%), Germany (1.1%), Netherlands (1%) and Italy (0.8%). This scenario has led community technicians to reduce the figure for next year from 1.7% to 1.4% for the EU as a whole and from 1.6% to 1.3% for the Eurozone. In the case of Spain, the 1.9% figure is a tenth less than expected in the spring, as “the weakening of economic activity expected at the end of the year will continue until at least the first half of 2024.” This is a slowdown scenario that the rest of European economies also face due to the impact of restrictive monetary policy, which will continue to constrain economic activity.
Why does the Spanish economy manage to survive better? Community technicians attribute this to: household purchasing power It is expected to benefit from rising nominal wages as well as a continued easing of price pressures. All of this “partially alleviates barriers to private consumption,” according to the report. This will also contribute to the reduction of financial risks by adding the low leverage ratio achieved by the private sector in recent years and the resilience of the banking sector, and the implementation of the recovery and resilience plan. New Generation funds It is expected to continue supporting investment growth over the forecast horizon.
Moderating inflation
on the subject inflationNew forecasts show that energy inflation in Spain will fall to 3.6% in 2023 due to the ongoing slowdown from the third quarter of 2022. In the face of high energy prices, inflation will continue to fall and is expected to reach 2.9 percent in 2024. The new report also states that the basic structure of inflation, which excludes energy and food and does not include industrial goods, will decrease more gradually with the transition period. The reflection of high energy prices on other items, especially food and services, continues in the first half of 2023.
Regarding inflation in the rest of the Eurozone, Brussels forecasts that it will fall from 5.6% in 2023 (6.5% in the EU) to 2.9% in 2024; This rate is far from the peak of 10.6% recorded in October last year. Poland, which recorded the highest figure (11.4) among the major economies of the EU, followed Germany (6.4%), Italy (5.9%), France (5.6%) and the Netherlands. (4.7%). The situation will be the same in 2024: Poland (6.1%), Netherlands (3%), Spain and Italy (2.9%), Germany (2.8%) and France (2.7%). Brussels’ updated scenario is not free of risks, with Russia’s war against Ukraine and geopolitical tensions remaining a source of uncertainty. The European Commission also warns that monetary regulation could affect economic activity and the possible impact of rising climate risks more than expected.