Brussels (EFE).- The European Commission revised this Monday four tenths upwards its growth forecast for the Spanish gross domestic product (GDP) for 2023, up to 1.4%, and cut its inflation projection for this year to 4, 4%, four tenths below what was anticipated in their latest forecasts.
For 2024, the Community Executive’s Winter Macroeconomic Forecasts maintain that the economy will grow by 2% and that the inflation rate will moderate to 2.3%, the same figures that were projected last November.
Spain will thus register this year the largest increase in GDP among the large European economies, ahead of Germany (0.2%), France (0.6%), Italy (0.8%) and the Netherlands (0.9%) ) and above the euro area as a whole, which will grow by 0.9%, also more than expected a few months ago.
The forecast of the Community Executive is, however, more pessimistic than that of the Government, which anticipates a growth of 2.1% in this 2023.
“Spain weathered the negative effects caused by the war in 2022 relatively well, expanding by 5.5% in 2022, one point more than expected in the autumn,” said the European Commissioner for the Economy, Paolo Gentiloni, at the presentation of the Forecasts .
The recovery of tourism, private consumption and the “positive developments in the labor market” underpinned this growth and towards the end of the year the slowdown in inflation helped to sustain consumption and investment, despite which the Spanish economy still closed 2022 below its pre-pandemic level, the report explains.
The drag effect of that more positive 2022 partly explains the improvement in the forecast for this year, in which Brussels foresees a gradual increase in economic activity sustained by higher private consumption as inflation moderates, the normalization of tourism and the imposed on the investment that the recovery plan funds will give.
By 2024, it expects growth to accelerate to 2%, although it warns that the tightening of financing conditions and the decrease in dynamism in the labor market “could negatively affect” the performance of the Spanish economy.
As for inflation, the European Commission calculates that it will drop from 8.3% last year to 4.4% in 2023, the lowest rate among the large economies of the euro area, and to 2.3% in 2024 .
Despite the fact that energy prices have fallen “markedly” since the third quarter of 2022, the transfer of this shortage to other elements of the shopping basket “accelerated considerably”, which “will push core inflation to high levels” both in 2023 and 2024, especially due to the effect on the prices of food and services, says the report.
The Commission considers that inflation will be “partially smoothed” by the measures adopted by the Government, including the extension of the VAT reduction for gas and electricity and the package approved in December that includes a reduction in the electricity bill for households vulnerable and the reduction of VAT on some foods.
Conversely, a “faster-than-expected adjustment” of wages to inflation could fuel inflation over the forecast horizon, it adds.
