Spain Economic Outlook. Third Quarter 2022

Summary

GDP growth in Spain is maintained at 4.1% in 2022 and revised downwards for 2023 (1.8%). The main reason is the scarcity of some raw materials and the impact of their higher prices on inflation.

Key points

• Key points:
• The global economy will slow down significantly, with negative growth in more than one quarter in the US and Eurozone. This will contribute to the fall in inflation, which will remain above target in the short term. The scenario is very uncertain due to the coincidence of multiple shocks.
• In Spain, the forecast for 2022 is maintained (4.1%), but growth for 2023 is revised downward, from 3.3% to 1.8%. Household consumption has been negatively affected by the increase in prices and some supply factors.
• Among the factors that will explain the slower growth are the increasingly likely shortages of some raw materials and the impact of higher commodity prices on inflation. In addition, the financial burden on companies and households is expected to pick up as the ECB withdraws monetary stimulus.
• Going forward, growth would continue to be positive. The wealth accumulated by households has not yet been used. Exports continue to increase and strong growth in equipment investment could sustain them. Construction investment will accelerate in the coming months due to NGEU funds.
• The short-term bias is to the downside. A gas restriction scenario is possible in Europe. In addition, the inflation trend is high, despite the measures taken, and could become entrenched making it difficult to bring it down quickly. The implementation of NGEU funds needs to be accelerated. In the medium term, the bias will depend on the reforms to be implemented over the coming months

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