The OECD certifies the economic slowdown and calls for measures to tackle inflation


The Organization for Economic Cooperation and Development (OECD) joins other organizations and analysts and a slowdown in the Spanish economy advances next year to 1.3%, three tenths below the previous estimate made in September. Its calculation is more pessimistic than that of the Government, which places growth at 2.1% next year, but it is more in line with that recently published by the Bank of Spain (1.4%), the Independent Responsibility Authority Fiscal (1.5%) and above the perspectives of the European Commission (which place the growth of activity at barely 1% next year).

The club that encompasses the most developed economies places the fight against inflation as the main economic priority and estimates that the rise in prices will be an average of 4.8% next year in our country (which will end this year with an annual CPI rate of 8.6%) and that it will remain at the same level in the face of to 2024, which would imply that Spain will not be able to completely tackle inflationary pressures. The country will see its inflation rate continue when the euro zone as a whole will have reduced it from 6.8% in 2023 to 3.4% in 2024. It is just the opposite of what has been happening to date. Inflation peaked in our country in July (10.8%) and has moderated to 7.3% in Octoberwhile in the euro zone it has not stopped advancing in this period and reached 10.6% last month, the highest since the incorporation of the euro.

From the calculations that the organization has published this Tuesday, it can be deduced that Spain will grow more than most of the large developed countries, especially when compared with the rest of the large European economies. Germany will register a drop in activity of 0.3% and France and Italy will advance less than half, to 0.6% and 0.2%, respectively. South Korea (1.8%), Japan (1.8%), China (4.6%) or India (5.7%) will grow at a faster rate than the Spanish economy. All of them, economies less dependent on Russia and to which the war and its consequences in energy affect them to a lesser extent.

GDP will grow at 4.7% this year, more than expected

It is also appreciated how the savings that the private sector accumulated during the pandemic and the gradual arrival of Next Generation Funds and its impact on public investment are supporting consumption and allow us to harbor more optimistic expectations for the end of this financial year. Thus, the ‘think tank’ improves its previous forecast and places the rise in GDP at 4.7%, three tenths above what is contemplated in the macroeconomic table included in the General State Budget for 2023.

Private investment and consumption will be affected in the coming months by the increase in interest rates that the European Central Bank (ECB) expects to continue applying to try to keep prices in check. This tightening of monetary policy will also have an impact on the housing sector, although the blow will not be as strong as during the last financial crisis, in which property prices plummeted, employment fell sharply and activity he backed up forcefully. In this time, moreover, the percentage of variable rate loans has decreased notably in relation to the total.

The organization adds in its forecasts that the slowdown in the economy should not translate into a greater increase in the unemployment rate. In fact, the organization’s economists place the unemployment rate at 12.9% next year and lower it to 12.7% for 2024. All of the above will allow Spain moderately reduce the imbalance in their public accounts. The deficit will be reduced from 4.9% this year (one percentage point more than what the Government anticipates) to 4.2% in 2023 and 3.7% already in 2024.

Europe, pending energy this winter and next

The main risk surrounding these projections is that the energy crisis worsens this winter in Europe and that the one who comes will do it even more due to the difficulties in filling the gas reserves. According to the club of developed countries, higher gas prices or a supply interruption would cut economic growth and trigger inflation in the euro zone and in Europe in general. This is why the authors of the report emphasize that, regardless of the measures adopted by the central banks, Governments must also get involved with a more restrictive tax policy geared towards saving energy and promoting renewables.


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