spanish economy It will slow down even more strongly in 2024, growing by 1.6 percent, slightly below expectations three months ago. According to new data, inflation will be below expectations at 3.3 percent. quarterly economic forecasts It was published this Tuesday by the Bank of Spain. The organization’s growth forecast for 2024 (1.6%) is four-tenths below the Government’s (4%).
The organization now anticipates this average inflation It will remain at 3.3% in 2024, one point below the expectation in September, and this correction is, above all, moderation what do they show energy prices in international markets and the Spanish Government’s decision to extend the VAT reduction on food until 2024 (until June) and transportation bonuses open to the public (until December).
The Bank of Spain’s projection is that the rest measures against inflation (VAT reduction on electricity and gas, among others) will expire on 31 December and will not be extended in 2024. Otherwise (the Government is expected to announce its decision next week), the average inflation forecast for 2024 could still be lower. That’s more than the 3.3% the Bank of Spain currently estimates.
The institution expects that the inflation moderation process will continue to progress gradually in the coming quarters, so that the average rate of 3.4% estimated for 2023 will drop to 3.3% in 2024, fall again in 2025 and reach 2% in 2026. He predicts it will fall. and 1.9%.
Recovery in 2025
Regarding the development of economic activity, according to the updated perspectives of the Bank of Spain, GDP will grow from 2.4% growth in 2023 to only 1.6% in 2024. This is two tenths less (1.8%) than the organization had predicted in September, and the cut is, first and foremost, about detecting further slowdowns. execution european funds and with more pronounced weakness family consumption. In addition, the Bank of Spain adds that the tightening of monetary policy and higher interest rates are expected to have the biggest negative impact on economic activity in 2024.
Therefore, the GDP growth path currently charted by the Bank of Spain involves the economy slowing down between 2023 and 2024 (from 2.4% to 1.6%) and then returning to normal. Some acceleration in the 2025-2026 bienniumIt will reach rates of 1.9 percent and 1.7 percent.
In any case, if we compare with euro area average The forecasts of the Bank of Spain lead to the growth of the Spanish economy (2.4%); this growth will quadruple the EMU average (0.6%) in 2023 and double in 2024 (1.6% compared to 0.8%). The ECB forecasts 1.5% growth for the euro zone economy in each of fiscal years 2025 and 2026.
fourth quarter of 2023
The institution, currently run by Pablo Hernández de Cos, estimates that the Spanish economy will grow by 0.3% in the fourth quarter of 2023; This rate is similar to the third quarter, when GDP slowed.
In reality, the Bank of Spain detects a moderation in interest rates private consumption In the last period of 2023.
“This moderation in consumption will reflect, among other factors, the continuation of the process of transferring tension in the economy.” Money Politics at the expense of credit and less trust The number of consumers who will recently contribute to stopping the growth path observed in recent months regarding intention to make major purchases in the future,” underlines the quarterly report on the Spanish economy.
Survey conducted on consumer expectations The report prepared by the European Central Bank (ECB) suggests that this low mobility in the expenditures of Spanish families may continue in the coming quarters.
Pressure from foreign workers
The employment growth rate would stabilize in the last quarter of the year and the dynamism in foreign worker employment would be supported once again. Last year, these accounted for just over 40% of the total increase in membership, after increasing the weight of total members to 12.8% from the approximately 11% share represented by these workers at the end of 2019.
The Bank of Spain predicts that: average unemployment rate It will decrease from 12.9% in 2022 to 12.1% in 2023 and will continue a slight downward trend in the period between 2024 and 2026, although it remains around 11% of the active population.
unit labor costsFor their part, there is “high growth”, although there continues to be a modest recovery in negotiated salaries (3.5% on average in 2023; 4.1% for newly signed contracts). The Bank of Spain warns that the increase in non-wage labor costs (e.g. social contributions) and the weak performance in productivity indicate increases in unit labor costs above those observed in other countries in the euro area. finally impress competitiveness-price Spanish companies”.
Public deficit will be 3.4% in 2024
Projections on this subject public deficit Research conducted by the Bank of Spain predicts this imbalance will be 3.8% of GDP in 2023 (one-tenth below the Government target), but 3.4% of GDP in 2024, four-tenths above the official target. They estimate that it will reach . This will drag the country into an excessive budget deficit procedure.
The agency observes increased growth, especially from the end of 2022. re-caudation It falls below the level corresponding to the macroeconomic situation and the fiscal measures adopted by the Government.