He Bank of Spain has anticipated a new upward revision of its forecasts for the Gross Domestic Product (GDP) Spanish in 2023 from the 1.6% estimated in March to close to 2%, due to the better performance of the economy in the first part of the year despite the environment of international uncertainty.
On the occasion of the publication this Wednesday of the Annual Report 2022the Governor of the Bank of Spain, Pablo Hernandez de Cos, has pointed out that economic activity in Spain has been more resilient than initially expected, and in the months to come 2023 there seem to be signs of renewed dynamism. The probable new upward revision of GDP in 2023 by the Bank of Spain to around 2% would be close to the estimates maintained by the Government in the 2023-2026 Stability Program sent to Brussels a few weeks ago, where it is projected growth of the economy this year of 2.1%.
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According to him Bank of Spainthe increase in the rate of growth of GDP will contribute, among other factors, to the expected decrease in inflationary pressures –with the consequent recovery of confidence and the real income of the agents–, the disappearance of the disruptions in the chains global production companies and the deployment of funds linked to the Next Generation EU (NGEU) program.
The forecasts for the evolution of the activity of the Bank of Spain On the 2023-2025 horizon, they anticipate a gradual closing of the gap between Spanish GDP and that of the euro area after the pandemic. If the moment before the start of the pandemic is taken as a reference, the level of real GDP in Spain is still 0.2% below that observed then, while in the euro area it is 2.5% above.
In any case, the agency warns that uncertainty is high and persistent, and there are risks of materializing less positive scenarios. Among the main sources of uncertainty, the possibility of new episodes of global geopolitical instability, perhaps accompanied by new rises in energy prices, stands out.
There is also considerable uncertainty about the rate of decline in non-energy inflation, which will depend on aspects such as the strength of demand, the emergence of significant second-round effects on inflation via margins or wages, and the degree of necessary tightening of monetary policy, whose impact on the financial vulnerability of households and companies, on their consumption and investment decisions, and on aggregate demand as a whole is also highly uncertain.
The possible financial tensions that may derive from the process -very fast, intense and synchronized on a global scale- of monetary policy tightening They constitute another source of uncertainty, especially after the financial turmoil observed last March. In addition, internally, uncertainties remain about the possible contribution to private consumption of the savings accumulated by households during the pandemic, and about the pace of execution of the projects associated with the NGEU program and their capacity to increase the potential growth of the economy.
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