Funcas warns of "a sharp slowdown" at the turn of summer: tourism will no longer cover the drop in demand

Funcas foresees "a sharp slowdown in the economy after the summer."

The Savings Banks Foundation maintains its growth forecast for this year of 4.2%, for which tourism is essential, but lowers the estimate for next year, which places it at 2%.

At 4.2% this year, with no changes compared to Funcas' previous analysis, changes in the composition of the expected GDP can be seen: "the contribution of domestic demand will be only 2.1 points, that is, 1.7 points less than in the March forecast. This cut mainly reflects the

as a result of inflation," says the study released on Monday.

Of course, "households will draw on savings to finance their spending", so there will still be a slight growth in private consumption.

Faced with this cut in demand, an improvement is observed, with an upward revision, in the foreign sector.

Thus, Funcas raises the contribution of that area to 2.1 (1.7 points less than in the March report) "reflecting the recovery of income from tourism to the level prior to the pandemic and, to a lesser extent, from sales of non-tourist goods and services abroad".

However, this compensation of foreign demand will soon not be enough to cover the reduction in domestic demand, so a "sharp slowdown in 2023" is in sight, a year that would experience growth of 2% (-1.3 points with respect to the previous forecast).

This cut comes from the end of the rebound in tourism and would also be caused by the impact on exports of the cooling of the economic outlook in the EU as a consequence of the risks associated with the supply of Russian gas: even without a total cessation of this flow, the eurozone would lose a point of growth in relation to 2022, Funcas calculates.

"

, after the good result expected for this year," Funcas warns.

Domestic demand would rise slightly, but not enough to cover the general hit to European economies.

In addition, inflation "will continue to set the tone for the situation," recalls Funcas, who projects that the consumption deflator will grow by 8.8% this year and 5% next year, all this including the government's anti-crisis decrees.

The increase in inflation is 2.8 points and 2 points, respectively, compared to the previous scenario drawn by Funcas.

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