The European Commission has improved this Monday by three tenths the growth forecast of the Spanish economy for 2023. In a somewhat unusual exercise, because it arrives a few months later than usual and because it does not cover the whole of the EU, but only six richer members, the community technicians foresee that our country will close the year with an increase in GDP of 2.2%, three tenths above the 1.9% predicted in spring. In return, it reduces by one tenth, from 2% to 1.9%, its forecast for the year 2024.
Spain will be, by far, the economy that grows the most and best in the next two years, at least among the big ones. Brussels still contemplates a recession of 0.4% for Germany in 2023, does not believe that France and Italy will go beyond an improvement of 1% and even the Netherlands would stay at 0.5%. And the same happens in 2024, when it calculates a still very low growth, between 0.8 and 1.2% for our neighbors. And that, inevitably, affects everyone's performance.
The revised numbers are completely in line with those of other international organizations, with the Funcas panel or those of the Government itself for 2023 (not 2024, when it still expects 2.4, half a point above). The OECD expects 2.1% for this course, the Bank of Spain also 2.3% and the average of the Funcas panel is 2.1%.
After confirming a good start to the year, the report on our country predicts that "the economic expansion will be more moderate in the second half of 2023 due to the fading momentum of the tourism sector, weaker economic activity in the main trading partners, the impact of tighter financial conditions on aggregate demand and weaker labor market dynamics".
The good news should come from inflation. In this statistical exercise, the European Commission will only analyze GDP and prices. And after the very hard year 2022, where an average for the EU of 9.2% was registered, it estimates that it will fall to 6.5% in 2023 and the relaxation will continue up to 3.2% in 2024, much more controlled figures. Again our country stands out for good in that section, with the lowest inflation among the large economies, with n 3.6% this course, which is assumed between one and three points less than all the others. By next year, however, the differences would disappear and all would be around 3%, always according to the Commission's models.
"Household purchasing power, which is expected to benefit from the sustained easing of price pressures, together with rising nominal wages, partially mitigates impediments to private consumption. In addition, the lower leverage of the private sector achieved in recent years and the resilience of the banking sector will contribute to the mitigation of financial risks, while the implementation of the Recovery Plan is expected to continue to support investment growth over the forecast horizon," the report says.
Singular statistical exercise
The European Commission publishes its macroeconomic forecasts four times a year, once per season. The spring ones were in May and the normal thing is that before the summer break the same would have been done with the summer ones. However, volatility and statistical adjustments have led technicians to wait and limit its scope. "The delay in its publication has allowed us to take into account key data published during the summer, including information on real GDP growth in the third quarter and inflation in August. This allows us to give a more accurate picture of the economic situation and prospects for the autumn," explains the Commission.
The EU economy will continue to grow in the coming years, albeit with more limited momentum. The forecast revises the growth of the economy from the 27 downwards to 0.8% in 2023, from 1% projected in the spring forecast, and 1.4% in 2024, from 1.7%. It also revises growth in the euro area downwards to 0.8% in 2023 (from 1.1%) and 1.3% in 2024 (from 1.6%).
For Spain there are now some unknowns, because in a few days the INE will make public its own review, and some economists, who have been pointing out for months that the data did not reflect the reality of the recovery, expect it to be a notable rise, which would show that in reality our country was not at the tail of the continent in returning to pre-pandemic 'normality'. According to his studies, that would have happened a long time ago and the economy would have grown much more.
At the moment, and with the available data, Brussels expects GDP growth to reach 2.2% in 2023, an improvement of 0.3 percentage points that "reflects a carry-over of 2022 higher than expected and the solid results of the first semester. In 2024, real GDP growth is expected to moderate to 1.9%, 0.1 percentage point. less than projected in the spring, as the weakening of economic activity expected towards the end of the year will extend at least until the first half of 2024."