The European Commission believes that the Spanish economy will resist with some ease the climate of uncertainties that are concentrated on the horizon. Despite the doubts triggered by the war in Ukraine and the price crisis, the Community Executive moves away from the possibility of a recession. It calculates that Spain’s GDP will grow by 4% in 2022, in line with the forecast made in spring, although 1.6% below the estimate at the beginning of the year. Brussels technicians anticipate, however, a worse performance of the price crisis. The Commission doubles its forecast for inflation to 8.1% for this year, compared to the 6.3% estimated in May, which are the second economic forecasts of the Community Executive since the outbreak of the war. A figure that is below the community average of 8.3%, although it exceeds the 7.6% expected for the euro zone.
Spain will be one of the great economies of the euro that will grow the most this year. The Spanish GDP growth forecasts are above the 2.7% expected for the EU average and the 2.6% for the euro zone in 2022. If the forecasts are fulfilled, the Spanish economy would be the seventh in growth in the community market this year, at the same level as Greece and surpassed by Portugal, Slovenia, Ireland, Croatia, Hungary and Malta. For 2023, Brussels estimates a rebound in Spain’s GDP of 2.1%, which represents a reduction of 1.3 percentage points compared to the spring forecast and 2.3% less than the forecasts at the beginning of the year.
The figure is, in any case, above the 1.5% growth forecast in 2023 for the community average and 1.4% for the euro zone. The estimate of GDP growth of 4% for 2022 of the Community Executive lowers by 0.3 percentage points the forecasts of the Spanish Government of last April and also the estimates of 2023, which the Spanish Executive put at 3.5%. In this sense, the European Commission has analyzed that the EU economy continues to be especially vulnerable to the evolution of the energy markets due to the high dependence on Russian fossil fuels, for which it forecasts that the economy will continue to expand, although at a slower. Looking ahead to next year, the Community Executive expects quarterly economic growth to gain momentum, thanks to a resilient labor market, moderation in inflation, support from the Recovery and Resilience Mechanism and citizen savings. The Economy Commissioner already indicated at the beginning of April that Brussels would correct its economic forecasts from the beginning of the year to take into account the impact of the war in Ukraine, although he ruled out an economic recession.
Concern about the price crisis
The forecasts are framed in an inflationary context that registers an upward spiral mainly due to the rise in the cost of energy after the Russian military invasion of Ukraine and the rise in the prices of raw materials due to bottlenecks in the supply chain. Thus, Brussels has raised the forecast for inflation growth in Spain in 2022 to 8.1%, compared to the 6.3% that it pointed to in its spring forecasts and well above the 3.6% forecast before the start of the Ukraine war. The figure is, however, below the community average of 8.3%, although above the 7.6% forecast for the euro zone. In 2023, inflation in Spain will contract to 3.4%, which is, in any case, 1.6 percentage points more than projected in the spring and 2.3 percentage points more than before the war in Ukraine. The forecast for the increase in the consumer price index is lower than the average for the eurozone and the European Union, where the rise will be 4% and 4.6%, respectively, for next year.
For the euro zone, the European Commission calculates that inflation will reach “historic” levels in 2022 and that it will climb to 7.6% in the euro zone and 8.3% in the EU as a whole this year, two figures They raise the forecasts of last May by 1.5 percentage points in both cases, in the second economic forecasts published since the Russian military invasion in Ukraine.
The Commissioner for the Economy, Paolo Gentiloni, has indicated that inflation has been “revised upwards due to high energy prices” as well as other inflationary pressures and added that the “risks are linked” to the evolution of the war Ukraine as well as the energy markets.
The Community Executive has shot up its forecast for an increase in inflation for the end of this year to 7.6% in the Eurozone in 2022 and 8.3% for the EU as a whole, two forecasts that it qualifies as “historic” and which more than double the Executive’s projections prior to the start of the war, of 3.5% and 3.9% respectively.
By 2023, Brussels expects inflation to contract to 4% in the euro zone, up from the 2.7% forecast in May. For the whole of the EU, the Community Executive has forecast that inflation will stand at 4.6%, above the 3.2% of the spring projections.
In its analysis, the European Commission has indicated that many of the downside risks surrounding the 2022 spring forecast have materialized and has argued that Russia’s invasion of Ukraine has put additional upward pressure on energy commodity prices. and food. All this has fueled the inflationary forecast and has eroded the purchasing power of households, which adds to the slowdown in US growth and the negative economic impact of China’s “strict zero COVID policy”, as Brussels has argued.