The momentum of the Spanish economy has once again surprised the European Commission, which for the second time this year has revised upwards its growth forecast for 2023 and 2024, while lowering the data of the European Union and , in particular, that of Germany.
Spain "has exceeded our expectations regarding this spring", admitted yesterday the European Commissioner for Economy, Paolo Gentiloni, when he presented the update of the economic forecasts for the summer. The latest analyzes from Brussels indicate that the Spanish economy will grow by 2.2% this year, compared to the 1.9% predicted in May. The figure still reflects the drag effect of a better-than-expected 2022, and the good behavior of activity in the first half of the year, although a weakening of the activity at the end of the current financial year.
So, Spain is currently at the forefront of growth in the euro zone and the European Union as a whole, which is increasingly noticing the halt in the German economy, the impact of the energy shock and the consequences of the 'rise in prices on consumption. "The latest data confirm that the EU avoided recession last winter despite the persistent and exceptional headwinds that were blowing against it", stressed, however, Gentiloni.
Indeed, the latest activity data for the five main economies of the European Union, the only ones for which forecasts have been revised, point to a darker outlook than expected before the summer. The growth forecast for the EU this year is 0.8%, two tenths less than expected in May, a figure that would reach 1.4% in 2024, three tenths less than expected then. The key is in Germany: the GDP of the EU's largest economy will contract this year by 0.4%; the forecast is for it to advance by 1.1% next year.
"The latest data confirm that economic activity in the EU slowed down during the first half of 2023 as a result of the formidable blows it has faced," says the Commission. And although the labor market holds up and inflation continues to fall, growth is losing steam. The new inflation forecast in the EU for 2023, after closing 2022 at a historic 9.2%, improves and stands at 6.5% (two tenths less than predicted in May) and it is expected that to stand at 3.2% in 2024, one tenth more than planned at the time.
As for Spain, the strength demonstrated in 2022 and 2023 by the economy, however, will weaken in the final stretch of this year as a result of the end of the tourist season, the difficulties that its commercial partners are going through and the tightening of monetary policy. The calculation now is that in 2024 Spanish GDP will advance by 1.9%, compared to the 2% expected in May, so that it will remain the fastest growing country in the Eurozone, only surpassed by Poland in the EU ( 2.7%). Inflationary pressure in Spain will remain well below the EU average this year (3.6%) and the forecast is that it will remain at 2.9% in 2024, when it will be in line with the European Union.
Gentiloni ruled out that the Spanish political situation poses a risk to the economy or could cause delays in the execution of the recovery and resilience plan. "No, we are not upset", he assured, in response to questions from the press. "If you look at the forecasts that we have presented, Spain has a pretty good situation, better than other countries in terms of growth or inflation prospects", emphasized Gentiloni, who believes that the Government of Pedro Sánchez "is fully committed to avoid any delay" in the deployment and execution of the European resilience and recovery plan. "We always deal with the governments that are there, in functions or with full powers. The country we live in [Belgium] had a functioning government for a year and a half.”
On a global scale, the growth forecast has not improved, "which implies that the European economy cannot have strong support from external demand". And in the medium term, the outlook is uncertain not only because of geopolitical tensions, but because of doubts about the impact of monetary policy on the real economy, which could weigh on activity more than expected, or cause a reduction of faster-than-expected inflation and speed up the recovery, admits the community executive, who also places extreme climate phenomena among the risk factors.
