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Date Published: 19/06/2023

Big boost for Spanish economy as banks raise their growth forecasts

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The Bank of Spain estimates that Spain will grow by 2.3% by the end of the year

Big boost for Spanish economy as banks raise their growth forecasts

On the whole, the next few years are still pretty gloomy as far as the financial forecasts are concerned, but this week the Bank of Spain has lifted its expectations ever so slightly and predicted that the economy should grow by a modest 2.3% by the end of the year. This is far more promising than the last quarterly report published in March, although the experts do expect a slowdown to 2.2% in 2024.

The forecast for 2025 remains the same for now, at a growth rate of 2.1%.

All in all, the situation is rebounding at a quicker pace than either the government or the banks foresaw and all going well, the GDP could actually see growth of 0.6% this quarter.

The stability in energy prices has almost certainly had the biggest impact, although fuel and grocery costs have also plummeted in recent months. Inflation in Spain, while still high, is currently the lowest in Europe and the Bank of Spain’s report anticipates a drop to 3.2% in 2023, half a point less than what was put forward in March.

Core inflation should also fall to 4.1%, although this is still higher than what financial experts would like.

Looking further ahead, despite the Spanish government’s plans to introduce a new electricity pricing scheme, inflation will likely rise to 3.6% “as a result of the expected disappearance of the bulk of the measures deployed by the authorities to combat the effects of increased inflation."

According to the Bank of Spain, it will not be until 2025 when inflation here drops to 1.8%, a level at which the European Central Bank would cease implementing crushing rate hikes.

In other news: Spanish public debt rises to an eye-watering €1.53 trillion

Image: Pexels

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