The indicators available to date suggest that the Spanish economy has stepped on the accelerator in the first quarter of the year after chaining two consecutive ones with a very moderate advance, of just two tenths, in the midst of the crisis generated by the Russian invasion of Ukraine, the increase in the cost of energy and inflation. The data collected by the Independent Authority for Fiscal Responsibility (AIReF) through its MIPred prediction model, which calculates the progress of GDP in real time, point to economic growth of 0.7% between January and March in relation to the end of last year and 3.3% if the comparison is made in interannual terms.
The supervisory body is not the only one that appreciates this improvement, which the International Monetary Fund has also put on the table with the publication this week of its spring prospects. Specifically, it has raised the growth forecast for this year to 1.5%, four tenths above what it calculated in January. The indicators available up to now suggest that the economy will probably grow in the first quarter “at a higher rate than expected in our central scenario”, point out from CaixaBank Research. The leading Spanish entity by volume of assets had initially calculated that the economy would freeze de facto at the beginning of the year with an increase of just 0.1% quarter-on-quarter.
Sources from the Ministry of Economic Affairs highlight the fact that international organizations see Spain this year with growth above the average for the European Union, the Eurozone and the most developed countries in both 2023 and 2024. (The OECD has also done it recently). Specifically, they place the Spanish economy as the one that will grow the most among the largest in the euro, above what the IMF expects Germany, France or Italy to advance. What is behind this dynamism? Several factors explain why the economy is resisting an uncertain environment, marked by the fastest interest rate rises since the creation of the euro and, ultimately, by the turbulence in the financial markets.
Only up to February, the daily domestic sales of large companies increased by 5.4%, the thermometer that instantly reflects how the economy and consumption behave. The latter increased by 9.2% year-on-year in March, above what it had grown the previous month, according to the data handled by CaixaBank. A notable advance considering that inflation stagnated at the beginning of the year and that it was not until March when it would have eased to 3.3%, its lowest level in a year and a half, due to the base effect on energy prices -which rose exorbitantly a year ago after the start of the war-.
Other references that confirm the economic improvement come from the manufacturing sector, which accelerated its activity in March for the second consecutive month. It reached its highest rate of expansion since June 2022, with a reading of 51.3 points compared to 50.7 in February, according to S&P Global Market Intelligence (any result below 50 points on the indicator reflects a contraction in activity). . Furthermore, in the second month of the year the Industrial Production Index rose 0.6% in monthly terms, which gives an idea that investment is picking up.
Higher inflation differential and foreign investment close to record
All in all, Spain has been widening its inflation differential with the euro area to a maximum (3.1 points), which translates into a gain in competitiveness compared to what are, in fact, the main trading partners of the euro area. country. In the merged entity they contemplate a scenario in which the underlying, which excludes the most volatile elements from its calculation, stands at 4.5% on average this year and in which food becomes more expensive -also on average- 9%. One explanation for this improvement in consumption despite the CPI blow that has hit the pocket of households is in the job market. Affiliations to Social Security registered their best data for that month in the entire series in March, adding 152,000 people in seasonally adjusted terms to exceed 20.5 million contributors, which means that there are 1.1 million more people working than before the outbreak the covid pandemic.
“The foreign investment data for 2022 position Spain among the most attractive countries, especially for projects in the new green and digital economy,” they point to this newspaper from the department led by Nadia Calviño. Foreign investment exceeded 34,000 million in gross terms last year, the second highest historical figure, with a year-on-year increase of 14%. It did so especially in sectors linked to the execution of the Recovery, Transformation and Resilience Plan, such as telecommunications (which with 2,713 million obtained the best record in the last decade); the programming and computer science sector (1,400 million, the second best data in the series after 2021); renewable energies (with more than 2,800 million) and the research and development sector (more than 800 million euros, more than double that of any other year).
On March 31, the European Commission delivered to Spain the third tranche of the Next Generation funds committed, worth 6,000 million euros. With this procedure, which like the previous ones had to receive the approval of the Twenty-seven, Brussels fulfilled the 29 milestones and required reforms. With this disbursement, Spain has already received 37,036 million of the 69,528 in transfers obtained from the program, which confirms that the country leads by far in the implementation of the plan at the community level.
