S&P Global has reduced its growth estimate for the Spanish economy this year to 0.9%, a more pessimistic forecast than the one set by the Government in its latest macroeconomic table (2.1%) and which is also below the from the Bank of Spain (1.3%) or the European Commission (1%). The difference in calculation with the Executive is due to the fact that they expect consumption and investment to be less dynamic than what the official forecasts contemplate. All in all, this modest advance would place us at the head of the large European economies, since the German or the Italian will have to face a slight fall in their activity, of 0.5 and 0.1%, respectively. The euro area as a whole will be doomed to stagflation, a year of weak growth coexisting with still high inflation rates.
In the Spanish case, S&P places the average rise in prices at 5.1% this year, so Spain would once again be among the countries least affected by inflationary pressures (in 2022 it already closed as the euro economy with a lower annual rate of harmonized CPI, 5.5% compared to 9.2% on average). Thus, they calculate that the annual CPI rate in the Eurozone will average 5.7% during the year. Despite this complex environment, in which the main downside risks will continue to lie in the increase in financing costs (in the event that the European Central Bank has to be more aggressive with interest rate hikes) and in an escalation of the conflict in Ukraine, from S&P Global they emphasize that the activity data that have been published recently suggest that the economies of the region “are resistant”, as their director of Sovereign Ratings has pointed out.
Marko Mrsnik has placed among these positive elements the strength of the labor market, that the prices of raw materials have been contained -also those of gas- and that the problems of global supply chains have been easing. In addition, it has valued the fact that gas reserves are at 90%, since at the end of winter they will still be above 50%, giving governments more facilities to prepare for next year and preventing “risks” arise at the end of this exercise.
The speed at which NGEU funds are executed is not the key
Another of the keys at the macroeconomic level will be to see what happens with the confidence of companies and consumers, which is beginning to recover from historical lows. The firm anticipates that public investment will strengthen as the Next Generation funds are executed. In relation to this, Mrsnik himself has downplayed eventual delays in implementing them. “What matters is the quality of this expense and not the speed with which they are executed”, he has concluded. At the firm, it is not surprising that this pace is slower in countries like Spain or Italy, taking into account that their capacity to absorb structural funds already places them at the bottom in Europe.
Despite the fact that high inflation has contributed to public coffers, an increase in the collection of public accounts will be difficult, especially if the slowdown in the economy is greater than expected. In the firm they foresee that the deficit will close at 4% this year (very much in line with the government’s forecast), although everything will arise from the electoral cycle, which could generate more spending. The placement is indebted in the environment of 116.6% of GDP.