BBVA Research has revised its growth forecast for the Spanish economy for the end of 2024 to 2.9%, four tenths more. The bank’s research department relies on statistical analyses, on household consumption but also on the public to justify the improvement in prospects. That Spain continues to grow more than Europe while the Old Continent is sinking is nothing new. and now we have to analyze how long will he be able to: Economists warn that the trend of neighbors will eventually increase in a context of “economy of friends”, with increasingly regionalized trade. Without powerful allies, there is less dynamism.
The good development of the Spanish economy is based on an improvement in the competitiveness of the services sector, in contrast to the weakness presented by industry, like the euro zone and the United States. Spain will end the year recording rates of 0.7% and 0.6% in the last two quarters of the year, while next year will moderate its growth to 2.4%.
Spain knows how to take advantage of the need for labor required by companies in the service sector to intensively integrate a workforce made up mainly of immigrants. Fiscal policy continues to be supported by domestic demand. Households continue to spend (and save) against a backdrop of lower price increases and already lower interest rates.
The reality is that in Spain there is a combined effect of saving at record levels and positive spending behavior. Spanish families spend as much as if the situation were unstable and the future bleakwhen GDP creation and growth reach record levels; and inflation is expected to continue to grow at a slower rate than wages on average. In comparison, “Yankee” families squander almost all of their savings because they do not view the future with as much uncertainty.
In reality, growth is not of the quality it should be. Once again, Spain relies on human capital to generate jobs, activity and, ultimately, a gross domestic product based on “hands”. Workforce integration is synonymous with growth in quantity, but not in quality. Economists from the entity’s research department warn that we should see much greater improvements in productivity than those we currently observe, but that this also requires investments and a change in the productive model.
This investment gives a negative note and threatens to infiltrate the economic fabric at the very moment when the European economy is “within our reach”. After successfully climbing out of a larger post-pandemic hole, government spending supported 60% of the recovery, according to BBVA Research. The short-term blow will last as long as exports of tourism services last. The external market can still improve with regard to non-tourist and more qualified exports, which have improved especially in recent years.
But the level of investment is relatively poor, particularly disappointing because of the false expectations that European funds have generated so far. BBVA Research economists observe practically rely on the level of execution and tendering of “Next Generation” funds. Investment is the indicator that improves long-term growth potential, and Spain would not be able to stimulate it.
In the medium term and in budgetary terms, the public accounts leave light and shadow. The “denominator effect” derived from GDP growth will reduce the deficit (relative to GDP) to less than 3% even this year, freeing Spain from a major adjustment due to the entry into force of the new rules budgetary. The cross: what Pensions, the largest item of social spending, show a permanent deficit of 3%.
