MADRID – The European Commission has increased growth expectations for the Spanish economy for this year to 2.2%. That is an increase of three-tenths compared to previous forecasts.
The adjustment comes thanks to “solid performance in the first half of the year,” according to a Commission report. Despite the positive adjustment, Brussels warns that Spanish GDP growth expectation is expected to moderate to 1.9% in 2024. This is 0.1 percentage points lower than previously forecast.
Factors of influence
The Commission sees several reasons for this delay. The tourism sector is losing momentum, and there is less economic activity among Spain’s main trading partners. The tightening of financial conditions is also expected to impact aggregate demand.
Annual inflation in Spain is expected to fall to 3.6% in 2023, partly due to a steady decline in energy prices. A further slowdown of up to 2.9% is expected for the coming year.
In the context of the European Union, the Commission has lowered overall growth forecasts for the Union to 0.8% for this year and to 1.4% for 2024. A continued decline in inflation is expected in both the EU and the Eurozone.
The Commission points to several risk factors, such as the ongoing war in Ukraine and the increasing risk of climate change. These factors bring uncertainty and could further affect economic growth.
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