The good start to the year is leading different organizations and economists to revise their growth forecast for the Spanish economy upwards. The Funcas panel has added to the trend today, which has increased its growth forecast for 2023 by two tenths, to situate it at 1.7%, at the same time that it lowers that of 2024 by three tenths, which would remain at a 1.8%
The reason for this upward revision for this year has to do with higher-than-expected growth in the first quarter, 0.5%, and also the improvement that the INE determined for the last two quarters of 2022, which were not as flat as predicted. In this way, the drag effect leads 11 of the 18 national services consulted by Funcas to have revised their forecasts upwards.
In this way, after the 0.5% start, in the coming quarters growth would move between 0.2 and 0.3%. It is the good performance of exports that allows this improvement in the forecast for growth this year, which offsets the downward revision of household consumption.
However, the situation worsens in 2024. In the next year, GDP will only grow by 1.8%, that is, three tenths less than previously forecast. There is a majority agreement among the panelists who revise growth this year upwards in also reducing it for 2024 (8 out of 11). In 2024, it will be private consumption and investment that will compensate for less dynamism in public consumption. Regarding the foreign sector, it will give worse results in 2024, because a slowdown in exports is combined with a rebound in imports.
On the other hand, the Funcas panel does not believe the rate of reduction of the public deficit that the Government has set. This year it would remain at 4.2%, while it would be reduced to 3.7% in 2024. In this way, the Executive’s objective of reducing the deficit in 2024 to the mythical 3% would not be met, the reference figure in the fiscal rules of the European Union.
With regard to inflation, this year’s inflation has been revised downwards by two tenths, and would remain at 4%, while, on the contrary, the core has risen by three tenths, up to 5.8% . The INE placed inflation for April at 4.1%, but in a scenario of great volatility, with rises and falls that will be recorded over the coming months, especially due to the base effect, when compared with the same months of a year 2022 convulsed by the impact of the outbreak of the war in Ukraine.
As regards the external environment, the Funcas panel continues to see it unfavorable, both in Europe and outside it, and few changes are expected in the coming months. In the euro area, the tightening of monetary policy will continue. The panelists calculate that the one-year Euribor would be close to 4% at the end of 2023 to be below 3.5% at the end of 2024.