If the price of oil is already behind the latest increases in inflation, its impact may worsen as a result of the development of the war in Gaza and Israel, given that any source of instability affects the energy market. This is the warning issued by the General Council of Economists (CGE). “The war must influence the cost of oil, any source of instability causes future markets to jump and a greater supply of raw materials by intermediaries, which drives up the price of oil,” he says. Antonio Pedraza, president of the CGE Financial Commission. He also adds that everything depends on the duration of the conflict but that a price increase is foreseeable now and that it will take some time to stabilize later. “The logical thing is that it rises now, and stabilizes in the future, with a sawtooth market,” adds Pedraza.
This specific warning is added to a revision made by the Council of Economists of five tenths, up to 3.5%, of the average inflation forecast for this year. This calculation is based on an increase in the price of oil, already on the rise before the conflict in Israel, given that the Spanish economy is especially dependent on this product; in addition to the strengthening of the dollar against the euro, which also makes the exchange rate more expensive.
For the rest of the indicators, the CGE maintains its forecasts with 2.3% growth, unemployment of 1.8% and public debt of 110.5%.
Regarding growth, the Council expects a progressive slowdown in activity, calculating 0.2% for the third quarter, although it is possible that these figures will not be reached, and a rate close to zero for the fourth quarter, ruling out all ways negative growth. “The last quarter is not going to be negative growth, but it could be growth close to zero,” said Antonio Pedraza.
“We are entering a very complex semester,” says the CGE, adding that although family savings have increased, now more than consumption and investment, they are mainly dedicated to repaying debts and prevention, which can lead to weakening demand. This, together with the lower contribution of exports in the second quarter, may complicate the expected growth.
On the other hand, the Council of Economists recognizes that the positive employment trend continues in the second quarter, with historically high numbers of Social Security affiliates. The nuance comes when examining the data for September, when “a certain moderation” is detected, as it is the month of September in which employment has grown the least since 2018.
