In recent months and in the immediate future forecast, the weakness of the European economy contrasts with the dynamism of the Spanish economy, which shows surprising resilience. The membership data for the month of February published this Monday are an indication of this trend, and so is the BBVA Research report this morning. In its “Spain Situation”, the study center raises the Spanish GDP growth forecast by six tenths, reaching 2.1%; That is, above the Government’s forecast of 2%, a percentage that until recently seemed unattainable and which now appears increasingly within reach. And if we compare with the eurozone, it means tripling its growth.
The year would start with growth in the first quarter of 0.6%, which would mean maintaining the pace already established in the last three months of 2023, and could continue at around 0.5% in the following quarters. By 2025, GDP growth would continue at similar levels, at 2%, less than expected
The two key elements on which Spanish growth is based this year are consumption and the acceleration of service exports, in addition to a change in household consumption habits. Regarding private consumption, it is supported by the creation of jobs, the decrease in the savings rate and the improvement in the real wages of workers. In this first quarter of 2024 it would grow by 0.5%, while public consumption would increase by 0.2%. A rebound that takes place despite the rise in interest rates.
Furthermore, it is perceived that families consume fewer goods and, in turn, more services. Clothing and food have less weight, and on the other hand, from 2019 until now, catering and health care have won. “In the style of the United States,” they point out from BBVA Research.
This is on the consumption side. At the same time, service exports support GDP growth, and this both on the part of tourism and the export of non-tourism services, such as commerce, transportation and consulting.
Another element that works in favor of the economy is that the cost of energy falls, which can add up to 0.4 percentage points of GDP growth this year, while the reduction in interest rates would contribute one tenth more. The upward correction of the forecasts is also influenced by a more expansive fiscal policy than had been anticipated. It is the result of having partially extended the tax cuts this year.
Furthermore, European funds are reaching cruising speed, so, BBVA Research predicts, that if this pace continues, by the end of 2026 all of the 80 billion euros planned in the recovery plan will have been executed.
Just as BBVA Research revises the growth forecast for this year upwards, it modifies it but downwards for 2025. It is half a point less to 2%, that is, it would be a very similar level to this year. The reasons are both a more restrictive fiscal policy, the free bar in spending will definitively end, and the stagnation of productivity in an environment of increasing labor costs, in addition to a lower impact of the addendum to the recovery plan.
