The Twenty-seven will close a gloomy 2023 for the economy, with ten countries ending the year with negative growth. One of the countries that is saved is Spain, as one of the fastest growing in the entire eurozone. According to the latest forecasts of the European Commission, which were published yesterday, the Spanish GDP will advance by 2.4% this year, in line with what the central government had projected, but will slow down in 2024, to 1.7 %, two tenths less than what had been anticipated.
“We are approaching the end of a difficult year for the economy, in which growth has slowed down more than expected”, summarized yesterday the European Commissioner for Economic Affairs, Paolo Gentiloni, after the announcement of the economic forecasts. A reduction in the purchasing power of households causes an increase in interest rates, inflation and a reduction in global demand are factors that have ended up affecting the European economy. In addition to Germany (-0.3%), this year Austria (-0.5%), Luxembourg (-0.6%), Ireland (-0.9%), Sweden ( -0.5%), Hungary (-0.7%), the Czech Republic (-0.4%) and the three Baltic republics, Estonia (-2.6%), Latvia (-02%) and Lithuania ( -0.4%), in accordance with the Commission’s estimates.
Despite this, Spain, the fourth largest economy in the euro area, improved its growth forecasts by two tenths over what had been planned. The strong momentum of the Spanish economy during the year, especially the first half, will allow the country to close 2023 with a much better figure than that which had been calculated a few months ago. Spanish growth was remarkable in the first semester, with an expansion of 0.6%. Looking ahead to the second half of the year, it is confirmed that it will decrease, because, despite the good evolution of tourism, demand from other countries has decreased.
In 2024, Spanish GDP will grow less than expected, by 1.7% (compared to the 1.9% that was forecast two months ago), and domestic consumption will be one of the main economic drivers, also thanks to the fact that inflation will decrease. Likewise, they will push the funds of the recovery plan, which will help the prospects to improve and Spain to grow again in 2025 by 2%.
Inflation will remain high, declining, albeit very slowly, to 3.6% in 2023, thanks to moderation in energy prices, but not falling to 2.1% until 2025, according to the European Commission. In terms of unemployment, Spain will remain the country with the highest rate in the entire European Union: 12.1% in 2023 and 11.6% in 2024, practically double the average of the Twenty- i-seven
In addition, the EU executive warns that, if there are no changes, the country will exceed the 3% deficit target, with 3.2% next year, pending the presentation of a new plan budget once a government is formed. The figure could rise to 3.4% in 2025, with the risk of opening a file for excessive deficit, since fiscal rules have been deactivated since the pandemic, but from next year they will return to be in force The review is still being negotiated. “We will evaluate the new proposal when we receive it, but we note that there are very limited differences between the projections of the Spanish authorities and our estimates,” assured Gentiloni.
The commissioner added that he does not believe that the political polarization that is currently being experienced in Spain (something that “is not completely new in the recent Spanish dynamics”, he assured) can affect the economic prospects. According to the Ministry of the Economy, led by vice-president Nadia Calviño, the improvement in prospects “highlights the effectiveness of the economic policy measures adopted that allow Spain to lead economic growth, while managing to reduce inflation”.
The main economies of the eurozone will close a 2023 practically to forget. For starters, Germany, the eternal engine of the eurozone countries, will end the year with a contraction of 0.3% (but will grow again by 0.8% next year), while France will have a growth of 1%, and Italy, of 0.7%. “The European economy has lost momentum” this year, admitted the Community Executive. Growth projections for the Eurozone and the EU are very modest, at 0.6% this year, two tenths less than what had been forecast in the summer.
According to their calculations, as of 2024, GDP will improve by 1.3% for the Twenty-seven as a whole, and by 1.2% in the Eurozone. If all countries are taken into account, Greece will also close 2023 with a growth of 2.4%, like Spain, and only Croatia will grow more, with 2.6%.
