Economists Double their Forecast and Predict a 2.4% GDP Increase in Spain, in 2023

The General Council of Economists (CGE) has predicted that 2023 will close with an increase in the Gross Domestic Product (GDP) of 2.4%, more than double the figure that was expected a year ago (1%), as long as maintain growth in the fourth quarter of 0.3%. However, they have reduced their prediction for 2024 to 1.6%, one tenth less than their previous forecast.

Economists have indicated that this increase in forecasts has been a consequence, in part, of the series of statistical reviews carried out by the National Institute of Statistics (INE) in 2023, which have revealed the better performance of the economy both in 2022 as in the first half of 2023.

Regarding other surrounding countries, the CGE has indicated that Spain is one of the best placed, thanks above all to the evolution of domestic consumption , especially households, which in the third quarter of 2023 has increased by 1.4%.

However, the organization has indicated that the poor situation in the surrounding countries, with a euro zone economy that shows no signs of recovery, will end up affecting Spanish exports , which fell by 2.4% last October in rate. year-on-year, according to data from the monthly Foreign Trade Report published in December.

By 2024, if this poor evolution of exports continues, the CGE expects that it will be domestic demand that will continue to drive the economy. Specifically, he has predicted that this recovery will be led by consumption, mainly private consumption, since the extension of post-pandemic aid should maintain the good pattern of consumption and internal demand, with a large part expected to be implemented in 2024. of the European funds granted.

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By 2024, if this poor evolution of exports continues, economists expects that it will be internal demand that will continue to drive the economy

By 2024, economists predict that the inflation rate will continue to moderate and be above 3.1%, as long as inflationary tensions do not increase due to geopolitical risks. Regarding the unemployment rate, it is expected that at the end of 2023 it will be 11.8%, decreasing slightly at the end of 2024, to 11.7% , although economists have stressed that the unemployment rate remains the same.

“The year 2023 has been a good year for the Spanish economy, better than expected, with its lights and shadows, although for 2024 the geopolitical environment is very uncertain due to the wars in Ukraine and the Middle East, with the added risks that new countries get involved ,” as concluded by the CGE.

With regard to the deficit of public administrations, economists have pointed out that, in the third quarter, the debt represented 109.9% of the Gross Domestic Product (GDP) , so it is expected that at the end of the year this figure assume 108.6%; At the end of 2024, this value will be reduced to 106.4%.

The CGE estimates that the deficit will be 3.8% and will be reduced to 3.3% in 2024

On December 20th, a political agreement was reached among the 27 member states of the European Union for the reform of fiscal rules, an agreement that guarantees a gradual and sustained reduction of the deficit and debt, with a counter-cyclical impact.

Previously, on December 12th, the Council of Ministers approved the agreement by which the stability objectives and the ceiling of non-financial expenditure for the Public Administrations were set in the period 2024-2026 , for the return of the fiscal rules, suspended with due to the pandemic and, later, due to the impact of the war in Ukraine, an agreement that sets a deficit target for 2024 of 3%.

However, the CGE estimates that the deficit will be 3.8% and will be reduced to 3.3% in 2024, three tenths more than the objective set by the government , mainly due to the extension of anti-crisis measures and the increase in financing costs of high debt.

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(Featured image by DEZALB via Pixabay)

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First published in PlantaDoce. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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