Brussels confirms that the Spanish economy is stepping on the accelerator. The European Commission improves its Gross Domestic Product (GDP) growth forecast for this year by five tenths, which stands at 1.9%, as indicated in its macroeconomic forecasts for 2023. Again, it places Spain above the average growth in the EU, which stands at 1%.
The rise in the price of food drops 3.6 points and remains at 12.9% in April
It is not the first time that the Commission has improved its forecasts for Spain. In February he already revised them upwards. Then, in four tenths, up to 1.4%. A similar movement occurred last week, in this local case, because the Bank of Spain improved its growth estimate for the Spanish economy to 2% for the current year. The same foresight that the Government has. Both are minimally more optimistic than those published today by the Community Executive.
Regarding prices, Brussels places inflation in Spain, for this year, at 4%. Again, this is an improvement over their previous forecasts, which came in at 4.4%. For next year, it will stay at 2.7%.
Spain improves its relative position with respect to the EU average, given that the rise in prices that it anticipates for the Union as a whole stands at 6.7% and, for the euro zone, at 5.8%.
“A very strong job market”
The EU Commissioner for the Economy, Paolo Gentiloni, highlighted during the press conference on Monday that with these data, the EU can say that it has dodged recession, with moderate growth during the first quarter, which will continue in the coming months. Also, that there is a dual situation. On the one hand, energy prices are moderating and the labor market is proving resilient. On the other, financial conditions are tightening, given the rise in interest rates.
Regarding prices, he considers that inflation is easing rapidly, but the general data. The core, which does not take into account energy and fresh food, remains “high”, which has pointed out that it continues to be a “risk” for growth in the EU for the coming months.
Regarding Spain, Gentiloni highlighted “economic activity is still recovering from the pandemic slump” and “it is expected to slow down this year as in other EU countries”. However, “the growth rate of 1.9% in 2023 remains well above the EU average, thanks to the implementation of the Recovery, Transformation and Resilience Plan and a very strong labor market”. He also highlighted that “the country’s economy will expand further, by 2%, in 2024, driven by consumption and investment.”
The commissioner has also referred to the drought, which he acknowledges has been taken into account when drawing up these forecasts for the current year. “Our projections for Spain are optimistic,” he stressed.
Brussels’ support for the Spanish growth perspective is valued positively by the Ministry of Economic Affairs, which highlights that Spain will be one of the European countries that will grow the most in 2023, which will allow it to lead growth among the main economies of the euro zone for the third consecutive year.
Also, that Spain will practically double the average growth of the community partners as a whole. “The European Commission also anticipates that Spain will be one of the countries with the lowest inflation in Europe in 2023 and that it will continue to decrease throughout 2024, favoring the competitiveness of companies and the Spanish economy”, point out from the Ministry headed by the First Vice President Nadia Calviño. On the other hand, they point out that “employment will also maintain its dynamism during 2023 and 2024, with growth above the average for the euro zone, which will allow the unemployment rate to continue reducing” and that both the deficit and the debt-to-GDP ratio will continue to decline in Spain above the European average between 2022 and 2024.
Regarding the Spanish unemployment rate, Brussels expects it to stand at 12.7% this year and 12.4% next year. Above the 6.2% and the 6.1% expected for the EU as a whole.