He predicts that the growth data for the second quarter will probably place the level of GDP above the level prior to the pandemic
MADRID, 23 May. (EUROPA PRESS) -
The General Council of Economists (CGE) has raised its growth forecast for the Spanish Gross Domestic Product (GDP) for 2023 from 1.5% to 1.8%, given the good performance in the first two quarters of the year of exports and tourism, the lower inflationary pressure, the reduction of the problems with the supply chains and the gradual application of the funds linked to the 'Next Generation EU' programme.
However, economists have warned that there are certain unknowns for the second half of this year due, among other reasons, to the reduction in the family savings pool and the drop in domestic demand, the possible brake on tourism, the consequences of the drought and the increase in the price of money with its direct impact on the real estate and construction sectors.
As the body chaired by Valentín Pich has recalled in its report 'Financial Observatory' for the first four-month period of the year, both the International Monetary Fund (IMF) and the Bank of Spain have raised their growth forecasts for the Spanish economy above 1, 5% this year.
Despite this, economists have warned that these forecasts "are not exempt from uncertainties" due to geopolitical circumstances and financial tensions and the tightening of monetary policy.
In addition, the president of the General Council of Economists of Spain, Valentín Pich, recalled that the Spanish economy continues to be the only one of the four large economies in the euro area that has not recovered the levels prior to the Covid-19 pandemic. Comparing the level of current real GDP with respect to the moment prior to the start of the pandemic, it is still 0.2% below that observed then in Spain --2.5% above in the euro area--.
However, Pich has predicted that the growth data for the second quarter will probably already place the level of GDP above the level prior to the pandemic.
"If we really want to be a leading country inside and outside Europe, we need to continue to pay attention to the efficient and transparent application of 'Next Generation' funds, while ensuring that the withdrawal of soon-to-be-expired stimuli -- except that they be extended-- it is done at the right time and not before, and think about the possible effect that this is going to have", has advised the president of the economists.
Regarding the labor market, economists point out that both the national accounting figures and those of the Active Population Survey (EPA) for the first quarter reflect a certain slowdown in employment, with the unemployment rate rising to 13.3%.
However, in April unemployment stood at 2,788,370 unemployed, 2.58% less than in March and 7.75% less than in April 2022, while social security affiliates exceeded 20.6 million affiliates for the first time.
With this scenario, the General Council of Economists has decided to reduce the estimated unemployment rate for the whole of this year from around 13% of the previous forecast published in April, to 12.7%.
Regarding the rise in prices, economists have maintained their estimates for the expected growth rate of headline inflation in 2023 in a range between 4% and 4.3%, identical to the previous estimate.
For their part, economists have pointed out that the indebtedness of the Spanish economy with respect to GDP continues its downward trend, but not in terms of volume.
Considering that debt growth continues to grow, 5.58% year-on-year in March, economists have revised their estimates for the public debt-to-GDP ratio in 2023 to 113%, from 111%.
The General Council of Economists considers that the deficit, on its side, will close the year at 4.4%, while the Executive's estimates place it at 3.9%. We must mention the commitment of the Government of Spain so that, by the end of 2024, the public deficit is reduced to 3% in accordance with the new Stability Program 2023-2026 sent last April to Brussels.
Lastly, economists expect new interest rate hikes to try to control inflation in the euro area, which has risen to 7% in April.
"As long as inflation is not subdued, which in April rose to 7% in the euro area, it is possible that they will continue to rise, as the European Central Bank has announced in the sense of continuing to adopt measures to achieve the 2% target in 2025.