Particularly noteworthy was the strong performance of the consumption indicators, especially car sales and air traffic, suggesting that tourism remains a major driver of economic activity. Moreover, the confidence indicators are showing a positive trend across all sectors, with the exception of construction. In addition to this, there are mixed signals coming from the labour market: registered unemployment fell in February (–2.0% month-on-month) for the first time in seven months, while job offers increased (+8.7% month-on-month). In contrast, the unemployment rate rose in January for the third consecutive month to reach 7.1%, its highest level since January 2021.
According to the flash indicator for March, inflation slowed by 8 percentage points to 7.4%, thanks to the base effect relative to the sharp rise in energy and food prices in March last year. However, core inflation remains very high and fell only 2 percentage points in March, standing at 7%. If energy prices in the international markets remain stable, a further slowdown in the headline CPI is expected in April, when the effects of the zero-VAT measure should also be noted in various items of the basket of food products.
However, the latest data point to a cooling of the market: the home price index for Q4 2022 revealed a slowdown (11.3% year-on-year vs. 13.1% previously) and the granting of home loans for new housing fell 13% year-on-year in January.
It stood at 0.4% of GDP (2.9% in 2021), thanks to revenue growth well in excess of expenditure (10.2% vs. 4.4%), driven by the notable increase in tax revenues (16.6%) and social security contributions (8.5%). On the expenditure side, the interest component continued its downward trend (–9.4%), reaching 2.0% of GDP. This is the lowest level in the series and places the primary balance back in positive territory (1.6% of GDP).
The current account balance in January registered a surplus of 268 million euros (vs. a deficit of 380 million euros a year earlier), thanks to the improvement in the balance of non-energy goods and, above all, services (mostly tourism). The income balance also contributed to this recovery, as a result of an increase in dividends received, a lower financial contribution to the EU and an increase in transfers received.