spain

After GDP growth of 5.1% in 2021 and a closing estimate of around 4.3% in 2022, Spanish economic activity is believed to lose strength throughout 2023, with growth expected to be around 1.2%. After a period of strong recovery in 2021 and the first half of 2022, the economy showed signs of slowing activity from the third quarter of the year, which was fundamentally due to the confluence of a set of adverse factors that negatively influenced the decisions of economic agents. This scenario of adversity included causes such as the energy crisis in Europe, persistently high inflation rates and the consequent restrictive monetary policy applied by the main global central banks, generating a general deterioration in confidence. In addition, the slowdown in the pace of GDP growth is intrinsically linked to the lower momentum of the sectors most affected by the health crisis, after the intense improvement felt as a result of the lifting of most of the pandemic containment measures. With regard to the pace of price growth, 2022 is expected to have closed with average inflation of 8.8%, which will gradually moderate to 4.9% and 3.5% in 2023 and 2024, respectively.

Although high inflation leads to a reduction in overall purchasing power, the government has introduced several measures to protect households and businesses from rising prices, especially for energy. With demand prospects deteriorating and financing costs increasing, private investment is expected to remain subdued. The timely and effective use of EU funds will be crucial to support investment, raise long-term productivity and achieve the ecological transition.

The labour market is showing very positive signs, with the number of workers and the unemployment rate evolving positivelynamely the reduction of the unemployment rate from 14.8% in 2021 to 12.7% in 2022, the lowest since 2008.

GDP growth rate in Spain

Inflation rate in Portugal