The Bank of Spain limits the impact of the war on economic growth in 2022 to 9 tenths, up to 4.5%.

The Bank of Spain is limiting the impact of the war on economic growth by almost one percentage point, as in 2022 and 2023, leaving GDP growth at 4.5% and 2.9% respectively. The “significant” impact is mainly due to the escalation of energy prices, which will push the overall CPI (Consumer Price Index) to 7.5% this year and delay GDP recovery until the corovirus pandemic by the third quarter. 2023 year.

At the end of 2021, GDP is still 3.8 points lower than in 2019, while the recovery in the Eurozone has already been completed. However, “this conflict will not have a structural effect on economic growth,” said Angel Gavilan, CEO of the Bank of Spain in economics and statistics, while presenting the institution’s forecasts, which assured that “the end of the projection horizon at the end of 2024 is close to the previous year.” As of December.

In addition, the Bank of Spain rules out a technical recession (a drop in two quarters of economic activity) in its central scenario this year, but warns that estimates should be taken with great “caution”.

To the extent that the Institute operates in a variety of extreme contexts. For example, by cutting off gas and oil supplies from Russia, which means that, depending on the capacity of the substitution, GDP growth will increase from 1.4 points to 0.6 points, the sum totaling 1.5 points. Inflation.

“This will be the most limited impact of this scenario on the eurozone, because the least direct relationship between Spain and Russia is important here,” said Angel Gavilan. This advantage does not prevent the rise in oil, gas and other commodity prices in international markets, to be a bigger blow to our country than to the rest of the EU (EU) major economies.

The government’s “temporary” shock plan, with various measures such as fuel discounts, direct assistance to those sectors most affected by rising electricity and fuel prices, or a limit on the electricity pricing system that is awaiting approval by European countries. The commission will add 0.6 points to increase economic activity and subtract inflation to 0.8 points, though it will be even more positive if they continue beyond June, as set by this time.

Huge loss of purchasing power of households

The Bank of Spain acknowledges that households are losing “a lot of purchasing power”, leading to the consumption of a savings bag accumulated during the pandemic, valued at 85,000 million euros, and as a result of which it expects a third reduction. On price increases in general.

Going back to inflation, beyond the general CPI, move to the main trading basket, which excludes energy and food, as they are considered to be the most volatile elements, according to the institute forecast, it will remain at 3%. Of course, he warns that in this basket, without electricity, gas, gasoline, which is growing sharply, 60% of goods and services are already more than 2%.