Spain Economic Outlook. October 2022

Summary

GDP growth in 2022 is revised upwards (4.4%) and the outlook deteriorates in 2023 (1.0%). The economy could remain stagnant in the coming quarters, or register moderate declines, due to heightened uncertainty, higher inflation expectations and interest rates.

Key points

• Key points:
• The global economy is slowing from 6.2% in 2021 to 3.2% in 2022 and 2.4% in 2023. The main risk will be inflationary pressures to require even higher interest rate hikes, pushing the global economy into a deep recession and increasing the likelihood of financial turbulence.
• In Spain, the period of stagnation will be short and the recovery will come from the first months of next year.
• Households and companies are in a better position than in the previous cycle of rate hikes. Savings accumulated during the period of confinement remain high; and investment will be sustained by the European NGEU funds.
• A gas cut scenario in Europe is feasible. A turning point in inflation is perceived, although it will remain high for some time. Formalising an "income pact" and accelerating the implementation of the Recovery Plan is a priority.

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