The Spanish economy slows down, but so does the escalation of inflation. The INE has confirmed the economic stagnation that different public and private organizations have been warning about. Spain grew in the third quarter a pyrrhic 0.2%according to the advanced data in the National Accounts of the statistical agency.
This GDP data is a jug of cold water after a higher than expected growth (1.5%) was recorded in the second quarter of the year. At first, it was hoped that with the support of tourism, a more sustained recovery would be possible, but the data that became known little by little from the evolution of the summer already anticipated this stagnation.
However, it is still possible that in year-on-year terms the GDP will end up experiencing an increase of around 4% in 2022. In the annualized data, the complications will be noticeable from 2023, when there are organizations that only forecast a GDP advance of 0 .7% in the year after a “short” recession.
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The positive news has been given by the CPI that has moderated in October, according to the advanced data, up to 7.3% thanks to the drop in electricity prices and to a lesser extent gas. However, the call “base effect” is also relevant in this containment of the rise, since the comparisons are made with months in which inflation was already skyrocketing in Spain in 2021.
The progress of the National Accounts gives new arguments to the organisms that anticipate the start of a short recession -two negative quarters- in Spain. That semester in negative would be the one that includes the last months of 2022 and the first three of 2023.
However, the GDP data has not been a surprise. In fact, a few days ago, an INE manager advanced that the growth of the third quarter would be close to 0%.
[El INE anticipa que el crecimiento del tercer trimestre será “en torno a cero”]
With growth of 0.2% and inflation of 7.3% one can speak in Spain of “stagflation”, which occurs when the GDP does not grow and the CPI remains at high levels. In fact, heCore inflation has not changed and remains at 6.2%according to the advance made public this Friday.
Nevertheless, freezing the economy is one of the objectives of the European Central Bank (ECB) to combat inflation after a decade of stimulus, accentuated by aid for the pandemic. If the central bank’s forecast comes true, it is most likely that the entire euro zone will experience a recession in 2023, from which Spain will not be exempt.
The data for the quarter-on-quarter evolution of GDP reflect a drop in business consumption which registered a negative figure of -0.2%, while household consumption fell one tenth compared to the previous quarter -up to 1.1% despite the holidays-. It has been public consumption that has allowed the economy to pull forward with an advance of 0.6% in these months compared to the previous three.
Also exports evolved positively in the photo that makes the annual comparison, but in quarter-on-quarter terms they register a slowdown -growing 1.3%, compared to the previous 4.9%.
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