The Bank of Spain warns that, despite the strong tourist activity, the signs of a sharp slowdown in the economy are multiplying, such as employment data and confidence, consumption and production indicators. The panorama that is drawn in the coming quarters is of an economic slowdown due to the penalty that inflation, uncertainty, the energy crisis and the tightening of financial conditions entail. In addition, the high levels of inflation "which persist for longer than anticipated" also impact. In conclusion, "the headwinds" that punish the European and world economy, also feed on the Spanish.
This is the analysis made by the Bank of Spain's General Director of Economics and Statistics, Ángel Gavilán, at the “Swiss Bankers Executive Study Tour” that took place this morning at the Madrid Stock Exchange.
Gavilán highlighted that in the second quarter the Spanish economy grew more than expected, reaching 1.1%, thanks to the reopening of economic activity. However, even in that same period it was already observed that inflation continued to rise, which was not expected, and that it also extended to the entire shopping basket.
In its latest forecasts published in June, the Bank of Spain calculated that Spain will grow by 4.1% this year and 2.8% in 2023, while average inflation will stand at 7.2% that year until falling to 2.6% the next.
In relation to the impact of the tightening of financial conditions on the decisions of economic agents, the Bank of Spain highlights that in loans for the purchase of housing, the transmission of the highest market rates to interest rates is being, so far, lower than in previous cycles of interest rate increases.
A prominent aspect of the prevailing uncertainty is the supply of Russian gas. In this sense, in the event of a definitive cut of this energy, Spain would be less affected than other European countries, although the blow would be severe from all minor ones. According to the Bank of Spain, an absolute cut would mean a fall of 0.6% for Spanish GDP, well below the impact on Italy, which would fall more than two points, or on Germany, more than 1.5%.
