The OECD lowers its growth forecast for Spain by 1.4 points and raises its average inflation forecast by 5 points

More inflation and less growth.

It is the conclusion reached by the

, in line with other international organizations, in the revision of its economic forecasts published this Wednesday, in which it

expected growth of Spain's

in 2022 by 1.4 points to

and the average

projection

for the year as a whole

to 8.1%.

The data for

are not more encouraging.

In fact, in the

published this Wednesday,

for next year to

-from 3.8% in the last estimate-, which demonstrates the

in the economy in the that we are submerging.

"

to 4.1% in 2022 and 2.2% in 2023 due to greater

, high

and the slowdown in

" they admit.

They trust, however, that "the domestic savings accumulated during the pandemic, the fiscal package to mitigate the effects of the war, the continuous recovery of employment and the Next Generation funds will support domestic demand. The recovery of tourism underway will also support growth".

Although in the latest forecasts, published in December, the OECD expected private consumption to grow by 4.5% this year, the galloping rise in prices plaguing the country has led it to reduce that expectation to almost zero: now they project a

In the

of the year, the OECD recalls that "the Ómicron variant, high inflation and the war in Ukraine caused a moderation in

", with which the Spanish economy is still far from recovering pre-covid level.

," they confirm.

In the second quarter, for which there are still no official growth data, movements of different signs are perceived: "

Consumer and business

and activity indicators for industry and services have slowed down since March Job

in April and permanent contracts as a proportion of new contracts have risen to 48% from around 10% in 2021. The recovery in tourism has accelerated, with spending by foreign tourists in March reaching 84% compared to March 2019".

They deny the Government: high inflation in 2023

This body is also much less optimistic than the Government about the

In the 2022-2025 Stability Program, the Executive foresaw that the

- an indicator used to measure the rise in prices instead of the CPI - would rise this year on average by

but

year , in line with the target set by the European Central Bank (ECB).

The OECD, however, believes that

than in 2022: they place it at 3.9% this year -in line with official forecasts- but they raise it to

in the following .

According to his calculations,

% and next year at

inflation

-which excludes the price of food and energy- will remain unchanged. changes:

on average this year and next.

To avoid second-round effects, they ask for an income agreement.

"Inflation is expected to moderate in 2023, thanks to persistently sluggish labor markets and subdued pass-through from inflation to wages, but

There is the

that

if there are new disturbances in the energy market or a greater pass-through to final prices and wages (...) The proportion of agreements with wage indexation clauses remains moderate, but is increasing, which highlights

to share the burden and avoid a spiral of wage prices", they point out.

To date, the proportion of wage indexation clauses is "low" and wages have increased by 1.3% until the first quarter of 2022, the OECD points out, but the scenario must be prevented from worsening.

They hope, however, that the agreement with Brussels to

which they expect to take effect in June, could help contain general inflation.

They ask to review public spending

The OECD reviews in its report all the

that the Government has implemented for 2022 and 2023, such as the fuel rebate, the extension of existing tax rebates on energy and direct aid to the transport sector and to industries with large electricity consumption, a refugee reception program and a new line of credit for vulnerable companies (10,000 million euros, 0.6% of GDP).

It also recalls that the direct

to cushion the increase in energy costs (6,000 million euros, 0.4% of GDP), which expired in June,

, and that the introduction of the mechanism to compensate the loss of purchasing power of

will support household income, but will also

in the forecast period.

For this reason,

that the measures focus on the most vulnerable groups, in line with what the IMF recommended on Tuesday, and that

"Fiscal support to address the short-term effects of the energy crisis on vulnerable households and businesses must be well targeted and temporary. A

medium-term

is needed to start gradually reduce the fiscal

and the proportion of

in GDP", they emphasize.

By 2022 they expect the public deficit to drop to 5% (four tenths less than forecast in December) and the debt to stand at 115.6% of GDP.

For 2023 they forecast a deficit of 4.2% and a public debt level of 113.1% of GDP.

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• Articles Alejandra Olcese