The President of Abanca, Juan Carlos Escotet, delivered a thoughtful lecture yesterday at the Afundación headquarters in A Coruña during the UIE Forum for Society and Economy. He presented a candid snapshot of recent economic developments and outlined the challenges ahead. He began by noting that the economy is expanding more robustly than expected. “I am naturally optimistic, but I am also realistic,” he said during the questions period.
He recalled grim forecasts of an approaching autumn and then a harsher winter, but he observed that the current moment feels more like a spring with outcomes that diverge from prior projections. The future remains uncertain, he acknowledged, yet the trajectory has bright spots. Since last November, growth projections for the Spanish economy have risen—from about 1 percent to 1.9 percent, with the Bank of Spain signaling a pace above 2 percent, he noted.
Several key factors, Escotet explained, could prevent the crisis from taking hold. Energy policy was the first. With careful planning and timely action, he argued, the energy shortage was avoided by securing supply. Employment, he added, demonstrated extraordinary resilience. Yet a corresponding strength in demand helped fuel inflation. “As long as purchasing power stays high, prices will stay elevated,” he warned. He also highlighted foreign demand as a crucial driver for better-than-expected performance, noting that exports boost GDP and that Galicia has seen noteworthy gains in overseas sales.
Other contributors, according to the Abanca president, include accumulated savings and lower household indebtedness, which have softened the impact of inflationary pressures and shifts in exchange rates. He emphasized that the situation differs from the 2011 crisis and pointed to a change in the first quarter of this year, when savings declined. He also observed that almost half of the reduction was due to mortgage depreciation, and that lower debt levels among families can be seen as a silver lining.
Inflation fell to 3.2% in May, the lowest level in almost two years
Following the analysis of the broader economic backdrop, Escotet turned to the challenges ahead. The most pressing issue is hidden inflation that remains stubbornly persistent. He warned that underlying price growth will outstay the ECB’s own estimates. In his view, inflation has been underappreciated by the ECB, and he criticized delays in tightening monetary policy. He argued for a mix of prudent rate increases and restrained fiscal steps, with debt adjustment and adherence to European budget rules. He suggested that public debt should stay around 60 percent of GDP while the deficit should be brought down from current elevated levels.
Finally, he lauded the strength of the Spanish financial system, which he described as better positioned than in the last crisis, with strong solvency, liquidity, and credit quality. He reflected on how some Galician savings institutions fared in the past. When they pursued broader markets, missteps led to substantial costs for the state, a lesson he framed as a cautionary tale about expansion without caution.
Abanca Energy was born to support the energy transformation
Reports indicate that Abanca created the Abanca Energy unit to promote energy projects undertaken by companies and households. The bank will assist customers seeking to develop energy-related initiatives—from production and distribution to marketing and consumption—both within Spain and abroad through Abanca Energy. The organization’s chief executive described the initiative as part of a responsible, sustainable, transparent, and innovative banking model that creates value while contributing to social development and environmental protection in the region. This stance aligns with a broader industry trend toward financing energy transition projects and sustainable growth in the Iberian Peninsula and beyond. [Source attribution: UIE Forum for Society and Economy]
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