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The Spanish indebtedness with respect to GDP gives another slight decline in the month of April

Date: May 20, 2024 Time: 08:30:53

The debt of the public administrations as a whole registered a slight decrease of 0.57% in the month of April compared to the month of March. Thus, it reached 1,526 trillion euros, which is around 112% of GDP, taking the nominal GDP of the last four quarters. This is how advanced data is collected this Tuesday by the Bank of Spain

In the last year, public debt has grown by 5.6%, with 81,035 million euros more, as a priority consequence of the higher expenses derived, first, from the pandemic crisis and, later, from the economic consequences of the War in Ukraine and rising prices. Despite this rise in public debt in absolute terms, Spain has managed to slightly moderate the weight of its indebtedness over GDP from the 113.2% registered at the end of 2022 to around 112% until April of this year.

The Bank of Spain revised upwards its growth forecast for the Spanish economy for 2023 on Monday, from 1.6% to 2.3%, as a result of a “more intense” advance in activity in the first months of the year and the review made by the National Institute of Statistics (INE) of the GDP data for the last 2022, which together explains five of the seven tenths of improvement in its estimate for 2023.

In this way, the general director of Economy and Statistics of the Bank of Spain, Ángel Gavilán, has indicated that the improvement in GDP projections for 2023 is mainly due to “past data”, since the growth prospects for the coming quarters do not undergo significant changes.

The rest of the upward revision to this year’s growth is due to the fact that the dynamism of activity in the second quarter will be higher than expected in their March projections. Specifically, for the second quarter of this year, the Bank of Spain estimates quarter-on-quarter growth of 0.6%, one tenth higher than in the first quarter, due to the greater dynamism of household consumption.

However, Gavilán has announced that quarter, although the prospects for the second are good, “the trend is downward” given the “signs of weakness” that certain indicators are sending in recent weeks, such as confidence, investment in housing or certain dynamics in the labor market, signs that have been disconnected from the call for general elections for July 23.

Reduce growth by one tenth by 2024

For 2024, the Bank of Spain has revised its growth forecast downward by one tenth, to 2.2%, reflecting, especially, a more intense tightening of credit granting conditions than anticipated in March, while that it remain at 2.1% in 2025.

In its Macroeconomic Forecast Report for the month of June, the Institution underlines that the weakening of inflationary pressures, with commodity prices “somewhat more favorable” for growth in 2023 than those estimated in its projections for the month of March, and the pace of execution of projects associated with European funds will allow the expansion of activity to continue for the rest of the year.

However, it is noted that this effect will be offset by the more negative impact on activity that the tightening of financing conditions will have due to the rise in interest rates to contain inflation. Gavilán has stressed that the European funds will be an important support for economic growth in the coming years, but has warned that their final impact appeared from how they are allocated.

In this sense, he pointed out that, with the information available, the tenders linked to the funds are being awarded to “relatively large” companies and with few difficulties in accessing credit, except in the case of the Digital Kit, aimed at SMEs. However, Gavilán has defended that supporting smaller companies could accelerate their development and contribute positively to investment in the long term.

The General Director of Economy and Statistics of the Bank of Spain has highlighted that the Spanish economy will grow until 2025 at a rate higher than the euro area, although this will still not allow closing the gap that opened between Spain and the euro zone, in terms of GDP level, at the beginning of the pandemic. Gavilán pointed out that, with the data for the first quarter, Spain is already practically at pre-pandemic levels in terms of GDP and above it in terms of the number of employed.

* 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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