Due to the impact of the war in Ukraine, the government is reducing GDP to 4.3% this year

Due to the impact of the war in Ukraine, the government reduced GDP growth to 4.3% this year, compared to the expected 7% this year. In addition, it fell to 3.5% in 2023 and remains at 2.4% in 2024 and 1.8% in 2025. Economy Minister Nadia Calvino has assured that this is a “reasonable” vision for the economy. The government forecasts for the Spanish economy are lower than those presented by some international organizations, such as the International Monetary Fund. Also below the Bank of Spain.

“The impact of the war is lowering growth forecasts in all developed economies,” Calvinio said as he presented an update to the macroeconomic table from 2022 to 2025, which will update the table presented in September last year. The vice president defended, despite cuts, that Spain’s growth would be higher than that of its European partners and developed economies this year.

“We have left behind the peak of inflation,” Calvinio assured. “An agreement with the European Commission to start lowering wholesale electricity prices will play a very important role,” he added. “In the second half of the year there will be a sharp slowdown in inflation,” he said.

Spain’s GDP (gross domestic product) grew by 6.4% in the first quarter, compared to the same period in 2021, due to the cessation of restrictions due to the corovirus pandemic. However, economic activity increased by only 0.3% compared to the fourth quarter, primarily due to the impact of the Omicron option after the war in Ukraine and the strike in the road transport sector.

Annual GDP growth by the National Institute of Statistics (INE) is 0.1 percentage points lower than the average expected by experts, who forecast 6.5% and point to private consumption as one of the main accelerators, moving up to 8. %, Although household expenses decreased by 3.7% compared to the last period of 2021. This is the first decrease since the first quarter of 2021.

The government predicted in September last year that this year would end with a 7% increase. However, various national and international organizations have cooled these expectations since the onset of the Ukraine crisis and the impact of higher-than-expected inflation caused by rising oil and energy prices. The International Monetary Fund has set the Spanish economy at 4.8%, the Bank of Spain at 4.5% and the AEF at 4.2%.

In September last year, the executive bought oil in 2022 for an average of $ 60 a barrel. This year, so far, the average price of crude oil is approaching $ 100, 64% more expensive. This gap is crucial as oil accounts for almost 10% of Spain’s total imports. In particular, in 2021 the crude oil tax was 33,696 million euros. This exercise will be much higher.

Source: El Diario

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