The Organization for Economic Cooperation and Development (OECD) confirmed on Wednesday in its preliminary report on the economic outlook for September that Spain will be the developed economy with the strongest growth this year, ahead of the United States. The organization’s experts improved the forecasts for our country by one point compared to their May report and put the growth of Spanish GDP at 2.8%, while the US GDP continues to remain at 2.6%.
The OECD points out in the document that growth in Spain, as well as in Canada and the United Kingdom, “has been quite solid.” OECD Secretary-General Mathias Gorman assured at a press conference that, in general, progress in the G20 economies “has been relatively solid” and inflation “has continued to moderate.” Instead, they issue a warning about the “weak” data presented by Germany and Argentina.
Thus, they forecast that global GDP will “stabilize” at 3.2% this year and next, “with greater disinflation, improving real incomes and less restrictive monetary policy that in many economies will help support demand,” they write.
This vision of the expansion of the Spanish economy is in line with the forecasts recently issued by the Bank of Spain, with its new governor, José Luis Escriva. The entity predicts the same as the OECD: 2.8% growth at the end of the year. At the same time, the Minister of Economy, Commerce and Business, Carlos Body, announced that the government would improve to 2.7% by 2024.
Regarding inflation, the organization hopes that the general situation be moderate This year in Spain it will rise to 3%, compared to 3.4% last year, which means maintaining the May forecast, while by 2025 the index will fall to 2.1%, a tenth more than what was predicted at the beginning of the summer.
On the other hand, the think tank is a little more optimistic about the evolution of core inflation, which excludes energy and food due to its volatility, since it expects it to slow to 2.6% this year, against 2.9% forecast in May, while for 2025 it remains at 2.2%.
Therefore, Spain’s headline CPI would remain well above the eurozone average (2.4%) this year, although by 2025 it is expected to remain in line with the Twenty, with an expected average rate of 2.1%. In contrast, Spain’s core rate (2.6%) will remain below the eurozone’s 2.8%, and next year it will be close to 2.2%.
Germany stagnates
In the specific case of Germany, OECD experts have lowered their forecasts by 0.1% compared to those made in May. It is true that for the moment, no recession is expected for the end of this year, but the European locomotive will grow a 0.1% Pyrrhic end of 2024, which determines that the European locomotive economy is completely stagnant.
At the Bundesbank, he was much more pessimistic. The experts at the German central bank assure that it is possible that the country is already in “a slight recession”, even if they do not expect a “significant, broad and lasting decline in economic performance”. However, they stressed that the German economy remains in a phase of weakness and in “difficult waters”.
Given the surprising 0.1% contraction in the first three months of the year, it can be said that the country is on the verge of recession, since two consecutive quarters of GDP decline are enough to achieve this.
The OECD points out that nominal wage growth “remains high”, particularly in Germany, where it is now moderating. They explain that the feeling of economic weakness “This has helped to increase domestic and business savings, which explains the weakness in industrial activity.”
This weak growth in Germany will hamper the progress of the eurozone. Gorman said the eurozone would grow by 0.7% this year, rising slightly to 1.3% in 2025, “supported by activity, as real incomes recover and credit availability improves,” he explained.
As for the United States, their growth should “slow down, but will be cushioned by monetary policy.” Thus, they maintain their forecasts for the world’s leading economy. at 2.6% for this year and will slow to 1.6% in 2025. In China, growth is expected to slow to 4.9% in 2024 (close to government forecasts) and 4.5% in 2025, “with additional stimulus measures offset by weak consumer demand and the ongoing deep correction in the real estate sector.
