Spain | The Spanish economy in the first year of the Ukrainian war

Summary

This Observatory evaluates the factors explaining the behavior of the Spanish economy during 2022, and estimates the structural shocks behind the growth of GDP per working-age person (WAP), the GDP deflator and real wages.

Key points

• Key points:
• GDP per WAP, although it has been growing during the last four quarters at annual growth rates close to 5%, has not yet recovered neither its pre-pandemic level (in 4Q2022 it is still 2.3% below its level in 4Q2019), nor its trend level.
• Supply shocks explain 1.5 pp of the observed GDP WAT growth during 2022, while demand shocks would have detracted 0.5 pp of growth. The main contributors to growth during 2022 were wage margins (1.0 pp), price margins (0.9 pp) and shocks to residential capital investment (0.4 pp).
• The only supply factors that have contributed significantly to lower growth have been the taxation of labor and capital, which have reduced GDP growth per WAP by 1.1 pp.
• Demand and credit shocks have had negative effects on growth in 2022: the external sector -1.5 pp, and monetary and risk premium shocks -1.4 pp.
• The vacancy-to-unemployment ratio has shifted from an average of 0.03 in 2019 to 0.05 in 4Q2022, implying a considerable increase in labor market tightness.

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