The Bank of Spain Raises the Increase in GDP by One-Tenth in 2022

The Bank of Spain raises the growth of the Spanish economy. The entity has revised upwards its forecast for growth of the Gross Domestic Product (GDP) in 2022, up to 4.6%, one-tenth more than that estimated to date. At the same time,  the agency has ensured that if the forecasts are met, the Spanish economy would avoid recession, according to the Quarterly Report on the Spanish Economy published on Tuesday.

However,  the entity has lowered growth by one-tenth for 2023, to 1.3%, has reduced growth by two-tenths in 2024, to 2.7%, and has added that in 2025 that GDP growth will stand at 2.1% It will not be until the end of 2023 or the beginning of 2024 when the country’s economy will recover its level of activity prior to the pandemic.

In the fourth quarter of 2022 and the first quarter of 2023, the Spanish economy will expand by just 0.1%, and from March it will rebound due to the relief of inflationary pressures, the recovery of foreign markets, and the application of funds Next Generation.

In this way, Spain would row against the current of the main economies of the eurozone and would avoid a technical recession, due to its less dependence on Russian gas. Although, the Bank of Spain warns that “it is hasty to rule out any scenario in a context of such volatility”, since the projections are based on the assumptions that energy prices continue to fall and anti-crisis measures are extended, among others.

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The Bank of Spain assures that the economy will rebound in the second quarter of 2023

Despite the fact that the rise in prices will be “persistent” in 2023, the inflation rate in Spain will slow down to 4.9% in 2023, 3.6% in 2024, and 1.8% in 2025, standing at the head of the European countries with less inflation, boosted by the lower price of energy in the country. Although inflation will moderate, the fall in food prices and core inflation will take longer to occur.

Regarding employment, the labor market has resisted in 2022, with growth in affiliation in the third and fourth quarters and an increase in permanent contracts. Until the end of the year, the Bank of Spain projects that unemployment will remain at 12.8%, rise one-tenth in 2023, and moderate to 12.2% in 2024, reaching 12% in 2025.

Lastly, the household savings rate has been reduced by inflationary pressures since the maximum reached in the second quarter of 2020, going from 25.1% to 8.5% and its future evolution will depend, to a greater extent, on the evolution of household and consumer confidence, as well as the rise in prices.

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(Featured image by byrev 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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