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HomeLatest NewsBBVA Research raises its growth forecasts for Spain to 2.4% in 2023

BBVA Research raises its growth forecasts for Spain to 2.4% in 2023

Date: April 12, 2024 Time: 16:57:31

BBVA Research has warned of its forecast regarding the growth of the Gross Domestic Product (GDP) of Spain up to 2.4% in 2023, compared to the 1.6% predicted in the month of March. On the contrary, it has cut its estimates for 2024 from 2.6% to 2.1%, according to the latest report ‘Situation Spain’, which is collected by Europa Press.

The report that was presented this Tuesday the atony of the internal demand. The new projections from BBVA Research for 2023 exceed by three tenths the estimates that the Government sent to Brussels within the framework of the Stability Program, where an advance of 2.1% is estimated for the Spanish economy this year.

However, the BBVA research service has decided to lower its growth forecast for 2024 from 2.6% to 2.1%, due to the greater uncertainties in the world economy for next year. This forecast is below government estimates, which forecast economic growth next year at 2.4%.

Dynamism in exports and slackness in domestic demand

According to the report, the better inertia during the end of 2022 and a greater dynamism than expected in the second quarter of this year explain half of the improvement in the growth forecast for 2023. On the one hand, the INE revised the GDP rises in the second half of last year by almost half a percentage point. On the other, it is estimated that the economy could show an advance of 0.7% in the second quarter of 2023, four tenths more than what was forecast three months ago. “Exports are behind the good performance of the economy, with a particularly important contribution from services”, have highlighted the economists at BBVA Research.

This advance occurs despite the “sluggishness” of domestic demand. According to BBVA Research, the cumulative drop in household consumption spending in the last of 2022 and the first of 2023, almost 3%, has been more consistent with the recession expected last fall than with the expansion in demand aggregate that is finally discarded.

Likewise, investment remains 2% below the figures reached in the third quarter of the previous year. The factors behind this contraction are, on the one hand, the increase in the price of energy and food, which has reduced the competitiveness of companies and reduced the purchasing power of income and wealth of families.

On the other hand, the increase in official interest rates has increased the cost of financing the private sector, which has negatively affected sectors that are intensive in the use of credit. However, it is expected that some of the factors that have affected domestic demand will partially reverse in the coming months, which makes it possible to anticipate a greater contribution to growth in the coming quarters of this component of GDP: the price of raw materials, the cost of financing and household savings.

500,000 more jobs, double the previous forecast

BBVA Research highlights that employment and prices show a more positive behavior than expected in March. As highlighted in the report, companies are creating jobs at a rate that would mean adding almost 500,000 jobs in the year, double what was forecast in March. Likewise, from February to May, inflation has shown data consistent with a decline that can be sustained over time, reaching averages of 3.4% in 2023 and 3.2% in 2024.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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