The European Commission has improved this Monday by four tenths the growth forecast for the Spanish economy for 2023

, going from the 1% it estimated in its last year, in November, to 1.4%

.

If confirmed, the data would be well above the average forecast for the Eurozone (0.9) and especially for the large continental economies, for which a much tougher year is expected.

Thus,

France

would barely grow by 0.6%,

Italy

by 0.8% and

Germany

by 0.2%.

According to the department headed by Commissioner

Paolo Gentiloni

, the same would not be repeated next year.

For the moment, Brussels maintains the forecast for Spain at 2%, again half a point more than the average for the euro zone as a whole.

The factor that explains the bulk of the upward revision is the same one that explains a good part of the closure of the Spanish economy in 2022:

the drag effect.

The national GDP was very weak in the last two quarters of last year, but as the report published today says, less bad than expected, which allowed it to end with growth of 5.5%, which was more than expected by Moncloa, and a full point more than the European Commission thought.

And that magnificent data pushes and 'drags' that of the following by a statistical effect.

"Economic activity is expected to recover gradually in the first half of 2023 and gain further momentum in the second half of the year. Overall, GDP growth is forecast to reach 1.4% in 2023, reflecting partly a drag effect higher than expected from 2022. As inflation moderates, higher private consumption and a greater normalization of tourism are expected to maintain activity throughout the year.In addition, the implementation of the Recovery Plan and European Funds is intended to boost investment growth, especially in construction and equipment. By 2024, real GDP growth is projected to rise to 2.0%," the analysis paper says.

Brussels publishes its estimates on the continental economy four times a year.

In November, pessimistic, I assumed that there would be a small technical recession,

at least two quarters of contraction, but the evolution has been better than feared.

Germany has avoided falling into negative territory, inflation has not worsened, the winter has been milder and the fall in energy prices has continued.

However, there are still widespread risks.

"The factors that may have a negative impact on growth in the future are the impact of the prolonged tightening on the financial conditions of households and the financial positions of companies and the weakening of the dynamics of the labor market," say the community technicians, pointing out to the repeated increases in interest rates by the ECB, to the increase in the cost of credit and a possible slowdown in job creation.

And the same goes for prices: "

The vision from the community capital is that "Spain weathered the negative shocks of the Ukraine war in 2022 relatively well" and that "the resilience of the economy was supported by the strong rebound in tourism during the summer season and the dynamism of consumption also supported by the positive evolution of the labor market, and despite the loss of real purchasing power,

the slowdown in inflation from autumn 2022

"contributed to strengthening the confidence of consumers and businesses, which in turn sustained consumption and investment towards the end of the year", Even so, the document highlights, at the end of the fourth quarter of 2022, the GDP was maintained by below its pre-pandemic level, in December 2019, being the only continental country that has not yet achieved it.

Spain is having growth data that is higher than the rest, solid, but it also had a further road to travel after the immense contraction of 2020. Work that the rest have already been doing.

Spain is also the country that has launched the National Recovery Plan the fastest, having already requested the disbursement of three tranches of the Next Generation Funds (in addition to the initial one, known as pre-financing) when most partners go for the first on second.

And some not even that.

This is making it possible to generate more investment, despite the slowness in the deployment of aid.

INFLATION IN REMISSION

The European Commission is also confident that good data will arrive on the part of inflation this year and next.

Thus, if in Spain year-on-year inflation was 8.3% in 2022, in the Eurozone average and somewhat below the community average.

Brussels

expects it to moderate to 4.4% in 2023

and 2.3% in 2024, practically returning to normal, at least understood according to the mandate of the European Central Bank.

Energy prices have fallen significantly since the third quarter of last year, but the transmission of

high energy prices

to other items in the basket inflation has accelerated considerably, the report says.

"This is expected to lift core inflation to elevated levels in 2023, particularly in the first half of the year amid persistent pressure, especially from food and service prices, and in 2024. Inflationary headwinds are expected to of this year are partially mitigated by the measures implemented by the government to mitigate the impact of high energy prices", he also says in reference to the Iberian mechanism or the additional discount voucher on electricity bills for vulnerable households and a reduction additional VAT on a large amount of food".

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