IMF warns of weak growth for the Spanish economy
The latest assessment shows that the group slowed its pace in the final quarter of 2022, bringing the annual expansion rate to 2.1 percent. This figure sits below the national average and is on par with or above levels seen in several European Union member states. The study points to elevated costs for energy and raw materials, ongoing inflation, and rising interest rates as key factors that intensified the slowdown in overall activity.
Domestic demand faced broad weakness, with household spending bearing the brunt of the decline. In contrast, exports continued to rise, reaching nearly 40 billion euros across the Community. In agriculture, adverse weather and higher production costs caused declines in most crops, while industrial activity and construction experienced slowdowns. The services sector, which had shown solid momentum through the first part of the year, was dragged down mainly by weaker transport and warehousing activity.
The Consumer Price Index CPI, which had been easing since September, rose to 7.7 percent in January, a bit above the national average.
Looking ahead, the report highlights that tighter monetary policy and persistent inflation will influence consumption and investment plans for private economic agents worldwide. A slowdown of up to 0.90 percent is projected for the euro area in 2023. Given this outlook, uncertainty remains high for the Valencia Community economy. Yet the analysis of recent data and the outlook for industry suggests that in 2023 the regional economy will maintain a flat trajectory in the first quarter and begin to show signs of a gradual recovery from the second quarter onward.
IMF warns of ‘relatively weak’ growth of Spanish economy
The central message from the CEV remains clear. As costs and prices ease gradually and Europe gradually regains momentum in its labor market, regional GDP is expected to approach a rise near 1.5 percent by year end. This outcome would exceed the national projection put forward by the CEOE and suggests a more favorable regional trajectory than previously anticipated.
Nevertheless, the report repeats concerns about inflation. Funcas released updated forecasts on February 15 that point to higher inflation in the current year. If those projections hold, average inflation could reach around 4.2 percent, reinforcing the need for cautious planning among regional firms and policymakers.