Specifically, it cut its GDP growth forecast for 2022 by 1.4 points to 4.1%. It sees inflation as the main threat to the recovery and expects it to reach 7% this year and 2.5% in 2023.
The BBVA research service has revised its forecasts for Spain’s GDP growth downward to 4.1% in 2022 and 3.3% in 2023. invasion of Ukrainethe ssanctions imposed on the Russian economy and price increases, especially fuel and electricity, in recent months.
This is reflected in the new ‘Situation Spain’ report presented on Thursday by George Sicilydirector of BBVA Research and chief economist at BBVA; Rafael Domenech, responsible for Economic Analysis; Yes Michael Cardoso, chief economist for Spain. Specifically, cut its growth forecast by 1.4 points of Spain’s GDP in 2022.
However, Spanish GDP data for the first quarter will show “significant” growth, in the order of 1.4%, although the coming quarters “delay” derived from the war in Ukraine, the main factor of the downward adjustment of the projections, as explained by Sicilia and Doménech.
The rise in raw material prices, where Russia and Ukraine have the largest market share, will be the factor with the greatest impact on the Spanish economy. The experts at BBVA Research make special mention of coal and oil on this point and believe that Russia’s weight in global fuel supply, along with sanctions, will create a relative deficit that will be reflected in gasoline and gas prices. .
As for the gas, the report indicates that Spain is better positioned than other EU member states to deal with the consequences of this deficit. However, BBVA Research expects the price to be historically high, impacting electricity spending and the most intensive businesses in its consumption.
The risks to economic activity are not only related to the war and sanctions against Russia. For the BBVA study service, inflation has become “the main threat to consolidating the recovery of the Spanish economy”. In this way, it calculates that inflation could end at an average of 7% in 2022 and an average of 2.5% in 2023.
For its part, the private consumption could ease the delay thanks to the easing of restrictions related to covid-19 and the savings accrued during the confinement. Likewise, BBVA experts believe that an expansionary demand policy will support spending growth, but will also drive prices up.
Source: EITB
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