Spain Economic Outlook. June 2023

Growth in 2023 is revised upwards to 2.4% and downwards in 2024 to 2.1%. The improvement is explained by statistical revisions and export developments. There are doubts about the sustainability of the pace of expansion and job creation in 2024, in line with the uncertainty in the global economy.

Key points

• Key points:
• Global growth in 2023 will be stronger than expected, in line with activity data. In 2024 it will be weaker than anticipated due to tighter monetary and credit conditions. Global growth will be 2.9% in 2023 and 2.9% in 2024.
• Better inertia at the end of 2022 and stronger than expected dynamism in 2Q23 explain the increase in the growth forecast for 2023. The improvement is due to external demand, despite sluggish domestic demand.
• Private consumption could pick up, helped by the good performance of employment, income certainty due to the V AENC and the fall in fuel and food prices.
• The normalization of the functioning of production chains, the implementation of NGEU funds and the increase in the working age population can sustain growth going forward and support investment.
• Looking ahead to 2024, there are doubts about how much longer activity growth can be sustained, due to constraints to growth in certain sectors, high interest rates, weak investment growth, drought, expected fiscal consolidation and policy uncertainty.

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