MADRID: Driven by the resumption of tourism and the European recovery plan, Spanish growth resisted the prevailing gloom last yearplacing Spain at the top of the major economies in the euro zone.
According to a first estimate published Tuesday by the National Institute of Statistics (INE), Spain’s gross domestic product (GDP) grew by 2.5% in 2023, compared to 0.9% in France, 0.7% in Italy and a contraction of 0.3% in Germany.
This figure slightly exceeds the forecast of the Spanish government, which bet on growth of 2.4%, but also those of the OECD and the Bank of Spain, which had revised their hypotheses upwards to 2.3% this autumn.
The Spanish economy “exceeded all expectations” in 2023, welcomed Socialist Prime Minister Pedro Sánchezhighlighting the “record” number of job creations last year in the country (780,000).
Spain is “the major economy in the euro zone having experienced the strongest growth in 2023”, reacted the Minister of the Economy Carlos Cuerpo, emphasizing in particular the strong increase in GDP in the fourth quarter (+ 0.6%).
A situation, according to him, remarkable given the context of high inflation and rising interest rates, but also international political tensions linked to the conflict in Ukraine and the war in Gaza.
“Greater resilience”
Faced with these headwinds, “the Spanish economy has shown greater resilience than in the past”, confirms to AFP Pedro Aznar, professor of economics at the Esade Business School.
According to the INE, the fourth economy in the euro zone benefited in particular from strong household consumption, while the government increased measures favorable to purchasing power in order to compensate for high inflation.
In the fourth quarter alone, consumption increased by 2.3% year-on-year. Public spending – boosted by the European recovery plan – increased by 4.4%, while exports rose by 1.2%.
This economic dynamism was particularly marked in the services sector, which benefited from record tourist numbers – with 84 million foreign visitors over the whole of 2023, according to the government.
The second most visited country in the world behind France, Spain benefited last year from “very good tourism figures”, which accounted for “nearly 15%” of Spanish GDP, with a “strong impact on tourism”. “employment”, underlines Pedro Aznar.
The Spanish unemployment rate, one of the highest in OECD countries, fell by more than one point last year, reaching 11.76% of the active population at the end of December compared to 12.87 % end of 2022.
“Clouds on the horizon”
This dynamic is good news for the Sánchez government, returned to power in mid-November after delicate negotiations with the Catalan separatists, and whose majority in the Chamber of Deputies remains fragile.
The strong increase in GDP in the last quarter of 2023, marked by an increase in “competitiveness” of companies, “places us in an advantageous position for 2024”, underlined Carlos Cuerpo in a video published on the social network
According to the government, growth should remain at 2% this year. This forecast is considered optimistic by most economic organizations, such as the IMF, which is betting on 1.7%, and the OECD, which expects 1.5%.
The “start of the year” is “more solid than anticipated” but “maintaining inflationary tensions” and “weak demand” from Spain’s “commercial partners” should lead to an economic “slowdown”, underlines Bankinter in a note.
An analysis shared by Pedro Aznar, who points out the presence of “clouds on the horizon”, such as the decline in the productivity of Spanish employees and the extremely high level of public spending.
Madrid, which has committed to Brussels to reduce its public deficit to 3% in 2024, after 3.9% expected in 2023, “will not be able to consistently maintain” such a high level of spending, underlines the economist.
2024-01-30 18:44:43
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