“We do not see a recession in Spain on the immediate horizon, far from it. We are going to grow 4% this year and by 2023 rates are expected to be around 2%, point up, point down,” says Margarita Delgado, deputy governor of the Bank of Spain, in an interview with the magazine ‘Telva’.
Inflation rose in July to 10.8%, a maximum since 1984
The institution enters with an optimistic vision in the debate on the risk of a contraction in economic activity since the last part of this 2022, which has been exacerbated during the summer by the suffocating rise in prices month after month, the end of the era of minimum interest rates, which has been raising financing costs for companies and families, and due to the disturbance and general uncertainty caused by the Russian invasion of Ukraine, specifically regarding energy and industrial raw materials.
The First Vice President and Minister of Economic Affairs, Nadia Calviño, has emphasized this position on Twitter, which has been called into question as autumn approaches, during which it is feared that the European Union will suffer from gas shortages and that oil, and therefore Fuels, keep firing.
At the moment, the data supports Calviño and the Bank of Spain. Our country almost doubled the economic growth of the eurozone in the second quarter, according to figures confirmed by Eurostat last week.
The exit of the pandemic maintains the bottom of the economic recovery, with Spain experiencing its first ‘complete’ summer since 2019, without restrictions. A reconstruction after the COVID shock favored by historical plans and stimuli, now continued by shock measures in response to the war and the energy crisis. And that is based mainly on the explosion of demand with the end of the restrictions, the good moment of the labor market and public and private investments.
The latest downward revision of the European Commission’s forecasts coincide with this analysis and maintain Spain as the country, among the largest in the EU, that will grow the most in 2022 and 2023, and are similar to those of the main national institutions, such as the Government, AIReF or the Bank of Spain. However, the growth of activity below 3% in 2023 moves away from the objective of recovering the pre-COVID GDP until 2024.
“Of course, there is no such thing as zero risk”, clarifies Margarita Delgado in the interview published by ‘Telva’. “The uncertainty is there, we cannot rule out that some quarter is not entirely positive, that the potential shutdown of Russian gas supply to Europe, fundamentally to Germany, could have a negative impact on economic growth,” she explains.
“Spain has a better starting point because it is not expected that there will be an energy shortage. Europe depends on Russian gas, some countries more than others, such as Germany or even Italy. But for better or worse we live in a global world. And although our exposure as a country to the Russian economy is very small, beyond some commercial elements, the rise in the price of energy means that all inputs end up on the rise, which is why inflation is rising in Spain as well”, explains the deputy governor of the Bank of Spain.