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Spain GDP growth is projected to slow to 2.1% in 2023 and 1.9% in 2024, after two years of strong post-COVID growth of 5.5%. Lower inflation and a resilient labour market will support households’ consumption. Stronger external demand will underpin export growth. Better demand prospects will encourage private business investment, notwithstanding the rise in the cost of financing. Headline inflation will edge down to 3.9% in 2024 on the back of declining energy prices and monetary policy tightening. The fiscal stance is expected to tighten to address high debt. As inflation recedes, fiscal support measures to mitigate the impact of high energy prices should be phased out. The implementation of the Recovery Plan, largely relying on Next Generation EU funds, will induce significant public investments, and can raise growth potential. Continuing to tackle low productivity growth and reduce fossil-fuel dependence should be a priority. Growth has proved resilient Faced with a challenging environment in the context of Russia’s war of aggression against Ukraine, the Spanish economy has held up remarkably well. GDP increased by 0.5% in the first quarter of 2023 compared to the previous quarter and was 3.8% higher than a year earlier. Business and consumer confidence have improved since the autumn, even if consumer confidence remains very low. The labour market is dynamic, with employment growth of 1.3% in the first quarter of 2023. The unemployment rate decreased slightly from 13.0% in December 2022 to 12.7% in April 2023. Headline inflation (harmonised index) fell to 2.9% in May, owing to lower energy prices. Core inflation stood at 4.1% and food inflation at 12.4% in April 2023. Nominal wages increased by 3.0% between the first quarter of 2022 and the same quarter of 2023.
Spain
Source: Instituto Nacional de Estadistíca; Eurostat; and OECD Economic Outlook 113 database. StatLink 2 https://stat.link/ywvh4d
OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 1: PRELIMINARY VERSION © OECD 2023