Spain ‒ 2023 2024 Scenario: towards a soft landing
- Recent economic trends
- Outline of our scenario
- Focus: public finances
We expect GDP to grow by 2% in 2023, supported by strong external sector and investment performance. On the other hand, private consumption is expected to be sluggish in Q2 and therefore detract from growth. Business momentum will moderate slightly in 2024 to 1.6% and will be made up differently, with growth driven by domestic demand instead of net exports.
Spain's GDP grew 0.6% quarter-on-quarter in Q1 2023, driven by the contribution of net external demand (1.4pp), while the contribution from domestic demand was negative (-0.8pp). This dynamic growth meant that Spain's GDP was just 0.1% off of its Q4 2019 level. However, this figure lags the eurozone, where GDP is already 2.2% higher than its pre-pandemic level. In a still complex and highly uncertain environment, the expansion of activity is expected to continue over the coming quarters. The resilience of the labour market (which will support the recovery in household consumption), the easing of inflationary pressure and the projected ramp-up of projects under the NGEU are expected to contribute to this progress.Ticiano BRUNELLO, Economist