Crisis worsens: Bank of Spain lowers its GDP forecast again and warns of “more intense” inflation

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This reduces this year’s growth to 4.1%, a return to pre-Covid levels in the third quarter of 2023, and raises the CPI for 2023 and 2024. And it also warns of the implications of the crisis with Algeria.

vice president of economic affairs
Nadia Calvio, Vice President of Economic Affairs.EFE
  • Forecast The OECD lowered its growth forecast for Spain by 1.4 points and raised its average inflation forecast by 5 points

Another shortfall in growth forecasts. Second in just two months and third since December. And an inflation that, although it will contain a bit of the gas limit this year, will be “more intense and persistent,

The Bank of Spain updated its macroeconomic forecasts this Friday, and showed that the crisis is deepening, that Spain’s economy continues to accumulate problems and delays in returning to gross domestic product (GDP) levels. This will not be achieved, explained NGL Gavilan, general director of economy and statistics. by the third quarter of 2023, Many later, apparently, than the end of 2021 in which the government came to ascertain that point.

Going into specific figures, GDP rebound to be 4.1% in 2022, less than the 4.5% reported in April and a far cry from the 5.4% projected in December. The data is also lower than the 4.3% projected by the executive, and furthermore lower than the expected rebound for 2023.

The main reason proposed by BDE is that the slowdown was “more pronounced than expected” during the first quarter of the year due to the impact of the variant Micron, Transport Strike and the Beginning of War in Ukraine. The organism, yes, highlights that activity is accelerating in the second trimester “in part due to greater mobility of branches”, requiring greater social interaction after the easing of practically all restrictions. is required.

The body does double exercise on inflation. On the one hand, it lowers this year’s projected figure as a direct result of the Iberian mechanism to limit the price of gas introduced by the government. The measure will reduce inflation by 0.5 points, with the average CPI for 2022 at 7.2% compared to the 7.5% projected earlier.

“However”, refers to the Bank of Spain, “the way” Food inflation and underlying factors over the period 2022-2024, which prompted an upward revision of the general inflation rate forecast for 2023 and 2023. Specifically, 2.6% in 2023 and 1.8% in 2024. An inflationary episode, Sparrowhawk summed up, “more intense and persistent,

Algeria and disturbances

Gavilan remarked that all these estimates may change when “additional setbacks” occur, and in fact he remarked that “Every week we have an extra hassle“The last one, the crisis between Spain and Algeria, about which it does not yet want to give a concrete impact estimate, but to which it has issued a clear warning.

“Can I have one Significant impact on growth and inflation Fundamentally in the short term,” he recalled, adding that “Spain imports about 30% of Algerian gas.” That is, the crisis arising with the Algiers government would be a new problem for the ailing Spanish.

The agency improves its estimates of income and expenditure for this year, as the public deficit will stand at 4.6% of GDP in 2022, compared to 5% previously projected. Furthermore, there are better prospects for 2023 and 2023, with rates of 4.5% and 4.2% respectively, Europa Press reports.

Instead, it has slashed its projections for debt in 2022, after putting it now at 114.9% of GDP, compared to an earlier 112.6% forecast. Looking at 2023, debt will be 113.2% of GDP, worse than the previous estimate of 112.8%, and in 2024 it will reach 112.5%, better than previous forecasts (113.5%).

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