The OECD increased the Spanish economy growth forecast in 2023 by four tenths to 1.7%. This expectation of GDP (gross domestic product) evolution is still lower than the government’s figure of 2.2% in the same year, after 5.5% in 2022.
The main reasons for this improvement in expectations are the “better-than-expected” start of 2022 and the “better-than-expected” start of 2023 in our country, according to the latest forecast of the BBVA analyst group. Update, in your case to 1.6%. None of these figures include the possible impact of the financial turbulence of the past few days.
These positive surprises are driven by the resilience of household consumption, despite the damage from inflation and the European Central Bank’s (ECB) interest rate hike. Also the strength of the foreign sector due to the recovery of tourism. And both factors have been supported by falling energy prices and strength in the labor market in recent months.
As for the price increase, the OECD lowers the estimate of inflation in our country by six tenths to 4.2% for the whole year, which is the lowest among the major economies of the Eurozone.
For the bloc of economies that share the euro, the international organization expects average inflation in 2023 to be 6.2%, two points higher than Spain’s.
In 2024, the OECD reduces the rate of disinflation. And for our country, it estimates 4%, which reflects the cancellation of the government’s shock measures, as the Bank of Spain has already warned.
Predictions, in detail
In BBVA Researcha’s forecast, which remains at 1.6% GDP growth, oil and gas relaxation contributes 6-tenths to the upward revision in 2023. Another four-tenths comes from the “better than expected” data itself for 2022. However, the tightening of monetary policy reduces this revision by five tenths, and the increase in the inter-occupational minimum wage (SMI) by one tenth.
In more detail, the increase in official interest rates affects household consumption by about 3.5 percentage points. And if the effect on GDP were to accumulate in 2023 and 2024, according to BBVA Research, it would total one percentage point. “Excessive savings accumulated during the pandemic would decline sharply, limiting future growth in domestic demand,” the bank’s analysts said.
“Household net financial wealth in real terms would decline by nearly 9% in 2022 and return to levels seen in 2019,” they continue. “Other than growth in consumption or investment, inflation has actually been the biggest driver of the decline in household wealth,” they conclude.
Source: El Diario