Madrid (EFE).- Spain reaches 23J with the economy slowing down due to the tightening of monetary policy, although with the forecast that growth will exceed 2% for the year as a whole, after a legislature in which the pandemic caused a historic drop in GDP of 11.3% that has already recovered.
Six indicators reflect the differences between the economic situation left by the coalition government on the eve of the elections and that found when it came to power at the end of 2019.
1. GDP
In 2019 the economy grew by 2%, three tenths less than in 2018, as a result of internal demand (consumption and investment) weakened by the lower confidence of economic agents in the face of international trade uncertainties and in a national context of political paralysis due to the repetition of general elections.
In the absence of inflationary pressures, the weakness of the world economy in 2019 – caused by Brexit and the trade war between the United States and China – was combated by easing monetary policy, in contrast to the current situation in which the continuous rise in interest rates is restricting financing for families and companies.
In 2023 the slowdown will be more pronounced, since all forecasts point to growth halving compared to 2022, although GDP growth will exceed 2% thanks to the good evolution of exports and business investment, in the face of weaker consumption.
The slowdown in the economy, after two years in which it has grown 5.5%, will be due to the transmission to the real economy of the continued rise in interest rates by the European Central Bank (ECB) to control inflation that skyrocketed after the invasion of Ukraine in March 2022.
This year, the recovery of the level of GDP prior to the pandemic will also be confirmed when the national accounting data for the second quarter are published.
2. Employment and unemployment
The year 2019 closed with a record in employment at 19.97 million workers, according to the active population survey (EPA), although the pandemic weighed down the figure to 18.6 million between April and June 2020, a destruction of employment that could be contained with the implementation of temporary employment regulation files (ERTE) subsidized by the State.
Occupation levels prior to the pandemic recovered in the third quarter of 2021, with 20 million employees, and since then the labor market has gained almost half a million workers, up to 20.45 million in the first quarter of this year.
Similarly, the number of unemployed began the legislature also at a minimum with 3.2 million (equivalent to an unemployment rate of 13.78%) and reached its maximum data in the third quarter of 2020 with 3.7 million (rate of 16.26%), to drop in the first quarter of 2023 to 3.13 million unemployed (13.26% unemployment).
3. Inflation
In December 2019, the consumer price index (CPI) stood at 0.8% year-on-year, in a scenario of no inflationary pressures and with core inflation (excluding energy products and unprocessed food) stable at around 1%.
In June 2023, inflation moderated to 1.9% year-on-year, one year after it peaked at 10.8% after the price of energy products skyrocketed as a result of the war in Ukraine.
However, the underlying has only slowed to 5.9% due to the resistance to lowering some processed foods, restaurants, hotels and tourist packages.
4. Debt and public deficit
The public deficit closed 2019 at 2.64% of GDP, above the 2% target, after experiencing the first increase since 2012 “due to multiple electoral appointments and strong social measures”, such as the rise in pensions or the increase in paternity leave, as justified by the Treasury at that time.
In 2022 the public deficit reached 4.8% of GDP, below the reference set by the Government (5% of GDP) thanks to the boost in collection, which registered a record high of 255,463 million euros, 14.4% more.
The need to finance a larger deficit caused by the increase in spending to alleviate the impacts of the pandemic and the war in Ukraine has led public debt from 98.2% of GDP at the end of 2019, to a maximum of 120.4% reached in 2020, although since then it has been corrected until it dropped to 112.8% of GDP in the first quarter of 2023.
5. Housing and mortgages
In 2019, the sale of homes fell by 3.3%, to 501,085 operations, the first decline after five years of recovery in the real estate sector, a contraction that deepened in 2020 with the pandemic.
After the 2020 crisis, the sector picked up a strong momentum and recorded exceptionally good data, while in 2023 the sale of homes cooled down again, chaining four months of declines, after dropping 6.4% in May, in an environment of rising interest rates that make financing more expensive.
The mortgage market closed the 2019 financial year, with a total of 357,720 signed mortgages, 2.7% more than in 2018.
Throughout 2023, the mortgage market has deflated, coinciding with the rise in the price of money and the rebound in the Euribor, such that the latest data for April show a contraction of 18.3% year-on-year in mortgage firms to buy a home, up to 27,053 loans, the lowest figure since January 2021, with the most expensive average interest rate in the last six years, 3.09%.
6. If
The Spanish stock market remains practically at the same levels as in the previous general elections in November 2019, with the selective IBEX 35 standing at around 9,400 points, a level that has recovered after the stock market collapse caused by the Covid-19 pandemic that led the indicator to a minimum of 6,100 points in 2020.
The IBEX 35 closed its last session before the elections, on Friday, November 8, 2020, at 9,393.70 points, after losing 0.57% that day and is currently trading at 9,451 integers.