The Spanish economy closed 2023 on a good note and this year still has the wind in its favour, despite a more than complex international environment. GDP grew by 2.5% last year, well above an anemic euro zone, and with a better-than-expected year-end. The National Institute of Statistics (INE) yesterday confirmed the advanced data of January 30, which already indicated an increase in GDP.
In this way, the trajectory of 2023 is that of a year that began with the first two quarters growing by half a point, to remain at 0.4% in the third and to go up to 0.6% in the last three months. A final push that leaves the economy well placed to reach growth of approximately 2% this year, which is the Government’s forecast.
The strong point of 2023 is the boost in consumption, both private and public administrations, which makes it possible to overcome even the most negative element, such as the drop in investment in the second part of the year. Going into details, private consumption grew by 1.8% in 2023 as a whole and recovers the levels of 2019, although it is true that it has been stagnant in the last three months. For its part, public consumption is the concept that has increased the most, with 3.8%, and investment grew by 0.8%, although it has been falling for the last two semesters and is still below the levels of 2019 .
“The most negative points of these figures are the excessive contribution of public consumption and that investment shows signs of great weakness,” explains María Jesús Fernández, senior economist at Funcas.
If the structure of the Spanish economy, highly dependent on services and tourism, paid very dearly for the pandemic, with a much more pronounced drop in GDP than its European neighbours; now, the lower weight of the manufacturing industry and a wider energy autonomy allow it to reach much higher growth rates than those of the euro zone. It is also helped by the good performance of the labor market, which makes it possible to forecast that in the spring it will most likely reach 21 million members of Social Security.
As for the European comparison, the increase in Spanish GDP of 2.5% is five times that of the euro zone average, which remains at 0.4%, and which is the largest of the large economies It is well above the 0.7% of France, the 0.9% of Italy and, of course, a Germany whose economy fell by three tenths last year.
The 0.6% growth in the fourth quarter is a good figure which, moreover, came unexpectedly, but, analyzing it in detail, there are some nuances. The main one is that household consumption slows down, and remains at 0.2%, six times less than the previous quarter, and, on the other hand, the thrust of public administration spending stands out, with a 1 %. This level of public spending cannot be maintained predictably at a time when it is time to return to fiscal orthodoxy and, therefore, control the level of deficit and debt.
A second worrying element is the fall of 1.6 points in investment in the last quarter, despite the deployment of European recovery funds, which are supposed to stimulate it. The Bank of Spain already warned of this weakness in investment in the projections of two weeks ago.
In any case, the stronger-than-expected end to 2023 will cause a drag effect this year, so both the Bank of Spain and several think tanks have already undertaken an upward correction of the growth forecast , placing it around 2% in 2024, which is the figure that the Government has indicated. The Bank of Spain already forecasts 1.9%, and BBVA Research, 2.1%.
The Minister of the Economy, Carlos Cuerpo, has stated that the data demonstrate “the good performance of the Spanish economy; in the face of catastrophic predictions and biased accounts, the figures are clear and incontestable”. Last week in the Senate, the minister already focused his speech on “dismantling a series of myths” about the Spanish economy that “even if they are repeated, they are still inaccurate”; and yesterday his speech went along the same lines.
Cuerpo highlights that the 2.5% growth last year is more than five times higher than the average of the euro zone and the highest among the main European economies. He also points to other positive data, such as the fact that membership is close to 21 million, the moderation of inflation and that the deficit closed last year at 3.7%, improving forecasts.
