The Spanish economy endures and continues to fuel at a level well above that of its European neighbors, but the time has come to slow down, to continue growing, but at more moderate levels both during the second part of the year and in 2024 .
This is the warning issued by the Bank of Spain in its projections yesterday, which foresee a growth of three tenths in the third quarter of this year, and in the fourth quarter "a relatively weak pulse of activity". to which they do not put figures. "This slowdown in activity will continue in the coming quarters," says Ángel Gavilán, director general of economics and statistics at the Bank of Spain.
Precisely this deceleration is what makes the entity reduce the growth forecast for 2024 by four tenths, leaving it at 1.8%, and by one tenth that of 2025, which remains at 2%. On the other hand, for this year, despite the slowdown in activity, an increase in GDP of 2.3% is maintained, as in the previous projections, because this slowdown is compensated by the upward correction that the ' INE published in July about previous quarters and their consequent drag-on effect. It is worth pointing out that these projections by the Bank of Spain do not incorporate the strong revision that the INE published on Monday on growth in 2021 and 2022.
The Bank of Spain points out the signs of weakness that the Spanish economy has shown during the summer. It grew by 0.4% in the second quarter, it was already below expectations, and from June the signs of fragility multiply, especially the PMI indicators, the purchasing managers' indices, which continue to fall, and also the latest Bank of Spain Survey on Business Activity (EBAE), which shows how companies' turnover is slowing down. Social Security affiliation also points in the same direction, lower than in previous months.
In the coming quarters, activity will follow "a contained dynamism", held back by interest rates, which will remain high longer than expected, and by the weakness of the external context and the impact on Spanish export capacity. Foreign tourism, which remains strong, will gradually tend to reduce its contribution to growth, given that tourism exports have already recovered to pre-pandemic levels.
On the contrary, the progressive decrease in inflation, the resilience of the labor market and the growing impact on the economy of the European recovery funds will play a role in consolidating growth.
In any case, Spanish growth, even if it is moderating, stands out for its relative strength in relation to the very weak growth of the euro zone. A difference that can be explained by the different sectoral composition of the economy. Hospitality and tourism continue to be in good shape and are sectors of greater weight in Spain than in its European neighbours, while manufacturing, which is slowing down, has a comparatively lower impact in Spain.
As for inflation, everything will depend on the evolution of the price of oil, but what is expected is that it will increase in the coming months, that it will remain high until the middle of next year and that it will reach a ceiling in 5%, and then start to go down.
Specifically, the Bank of Spain anticipates an upward revision of four tenths this year, up to 3.6% of harmonized inflation (IAPC), motivated by this increase in oil prices during the summer. It is also energy and the foreseeable withdrawal of the reduction in VAT on food and the transport subsidy at the end of 2023 that makes us anticipate an increase in inflation in 2024, with seven tenths more to be in a 4.3%
