Brussels raises Spain’s growth forecast this year and cuts inflation rate

by Lorraine Williamson
growth forecast

The European Commission estimates that the Spanish economy will grow by 1.9% in 2023, five tenths above the winter forecast. This puts Spain above the forecast of 1.1% for the eurozone and 1% for the European Union as a whole.  

European Economy Commissioner Paolo Gentiloni stressed that this 1.9% growth rate in 2023 “remains well above the EU average. This is thanks to the recovery and resilience plan and a very strong labour market” . He added that in the 2021-24 period, spending financed by anti-crisis fund grants in Spain and Greece is expected to rise to above 3.5% of GDP. Spain’s GDP growth forecast for 2024 remains 2%. 

Spring forecast  

According to Brussels’ spring forecast, Spanish inflation falls by 0.4% to 4% this year. Meanwhile the fall in 2024 will be 0.3% higher than previously forecast. This figure is also below the EU forecast for inflation, which would rise to 6.7% in the European Union as a whole for 2023 – as opposed to the previous forecast of 6.4% – and to 3.1% in 2024, also three tenths below the February forecast. 

For the eurozone, inflation has also been revised upwards from winter, to 5.8% in 2023 and 2.8% in 2024. These are figures that Gentiloni says will continue to “slow down”. Wherease, underlying inflation is expected to remain ‘almost double its historical average in 2024’. 

No recession, moderate growth 

The Spanish government welcomes Brussels’ forecast: ‘Spain will be one of the fastest-growing European countries in 2023’. Compared to winter’s growth forecast for 2023, it has also been raised by two tenths to 1% in the EU and 1.1% in the eurozone. The growth rate for 2024 also increases by a tenth to 1.7% and 1.6% for the EU and eurozone respectively. ‘There will be no recession, but moderate growth,’ the Italian commissioner summarised. 

Reducing public debt 

As for the pace of public debt reduction, the debt ratio is expected to fall in most EU countries. Spain, along with Belgium, Greece, France, Italy and Portugal, is likely to be among the six member states where debt is expected to exceed 100% of GDP by the end of 2024. 

Specifically, Brussels forecasts 110.6% for 2023 and 109.1% next year for the Spanish economy, while the average for the eurozone will be 90.8% and 99.9%, and 83.4% and 82.6% for the European Union as a whole. 

Also read: OECD improves growth forecast for Spain

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