Funcas lowers the GDP of 2023 to 1.1% due to the puncture of investment and consumption


The funcas panel anticipates that The Spanish economy will grow this year by 4.5%three tenths more than estimated in September, but has cut its forecast for the Gross Domestic Product (GDP) from 2023 from 1.9% to 1.1%. One point lower than that of the Government (2.1%) and in line with the forecasts of the Bank of Spain and the European Commission.

The upward revision of the forecasts for this year is motivated by the incorporation of the latest data published on National Accounts referring to the second quarter, a period in which the economy grew by 1.5%, and the third quarter, when the GDP rose more than expected, by 0.2%. But facing the fourth quarter of the year, the majority of panelists foresee negative growth.

In 2023, experts estimate zero growth in the first quarter and they anticipate increases of around 0.5%-0.7% in the rest of the period of the year. According to the report published this Wednesday, this year the contribution of the foreign sector will be 2.9 points (1.4 points more with respect to the previous Panel) and that of national demand of 1.6 points, 1.1 less in relation to the September consensus.

As they explain, all the components of domestic demand have undergone an intense downward revision and this slowdown will continue through 2023. Next year, the foreign sector will have a negative contribution of -0.2 points, while national demand will contribute 1.3 points, seven tenths less than what was estimated in September. On your side, investment and household consumption will register lower growth than in 2022while public consumption will return to positive rates compared to the setback this year.

Inflation forecasts worsen

Regarding the estimate for average annual inflation in 2022, the panelists have revised their forecasts upwards by one tenth, to 8.7%, while the core remains at 5%. For 2023, the forecast for the average general rate rises three tenths, to 4.1%, and that of the underlying two tenths, to 4%. Thus, the year-on-year rates of the general index expected for December 2022 and 2023 are 7.1% and 2.8%, respectively.

Prospects for the labor market

Regarding the labor market, the panelists expect employment growth of 3.5% in 2022two tenths more than in September, a percentage that is reduced by six tenths to 0.9% by 2023. On the other hand, the average annual unemployment rate will drop this year to 13% -three tenths less compared to the previous Panel- and it will remain at that level in 2023.

As for the public deficit, analysts have warned that it will remain at high levels. Specifically, the negative balance of public accounts would be 4.8% of GDP this year and 4.5% next year. On their side, they have pointed out that, in an international context of sharp economic deterioration and inflationary pressures, the decisions of the central banks continue to mark monetary policy, whose direction the markets are already incorporating.

Thus, the panelists have sharply revised their interest rate forecasts upwards. The deposit facility ECB would be 2.5% at the end of the forecast period, the Euribor would exceed 3%, while bond yield at 10 years it would be close to 3.5%.


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