Search results

As a result of teleworking, remote education and the restrictions imposed on more social forms of entertainment, we have witnessed an increase in the consumption of technological goods compared to other categories of consumption. While in the first article of this Dossier we analysed the global demand for these goods during the pandemic and its possible persistence in the post-COVID world, in this article we focus on the case of Spain.

The strong start to the year introduces some upward bias into the growth forecasts for 2023. Nevertheless, the risk that the second half of the year could be weaker, as the aggressive rate hikes are finally transmitted to the economy, may limit the growth expected for 2024.

2022 will be remembered not only for the intensification and persistence of inflationary pressures but also for the sudden shift in the direction of monetary policy, bringing to an end more than a decade of low rates and ultra-dovish policies.

The conflict in the Middle East has caused the financial environment to take a step backwards. Although it has not experienced significant tightening overall, it is less favorable to the performance of economic activity in the coming quarters. The risks are high, and while a swift resolution of the conflict could ease financial conditions, the prolonged blockade of the Strait of Hormuz threatens to exponentially increase economic and financial costs if oil and derivative product stocks fall too low and can no longer cushion the contraction in energy supply. It is also important not to overlook market monitoring of public debt dynamics in several advanced economies, nor the financial risks associated with AI, both in terms of its ability to live up to expectations and its potential to disrupt established economic structures.

As we approach the end of a year characterised by uncertainty and volatility in the economic and financial variables, the sensation is that the global economy is capable of absorbing the effects of the supply shocks, the increase in geopolitical risk and the rising interest rates much better than had been anticipated at the end of the summer.

Faced with the biggest oil shock in decades, the global economy is bracing for the consequences of the closure of the Strait of Hormuz, through which around 20% of the oil and LNG produced and consumed globally passes. The March data point to a sharper deterioration in services, the US economy is no longer booming, and inflation notes the first impact of rising energy costs. In Asia, the economies started the year under the same moon: Japanese strength, Chinese solidity and rising prices.

Although the storm caused by the COVID-19 pandemic is not yet over, we can already analyse what impact the response from the public administrations has had on wage inequality. Public sector payments to workers on furlough or those unemployed cushioned the fall in income for many workers, but to what extent did they dampen the rise in inequality? Internal CaixaBank data allow us to answer this question already, as well as allowing us to assess what would be the implications of greater efficiency in the management of these benefits.

The provisional agreement between the US and Iran reached mid-month, which extended the military truce and allowed the gradual reopening of the Strait of Hormuz, triggered one of the sharpest drops in oil prices in recent years. This led to a significant decline in short-term global inflation expectations. However, the Fed and the ECB toughened their messages in their respective meetings and emphasised their anti-inflation stance, generating opposing forces in the markets.

The improvement in the supply shocks, with the correction in energy prices and the easing of the bottlenecks, together with the fiscal support measures and the strength of the labour market, are contributing to better-than-expected economic activity. Indeed, this is even leading to an upward revision of GDP growth forecasts for 2023.

The announcement of a significant and widespread increase in tariffs by the Trump administration, coupled with an erratic and unpredictable economic policy, has triggered fears of a further slowdown in the global economy. In this context, it is time to re-evaluate where the Spanish economy currently stands, assessing its strengths and weaknesses in the new scenario.

We outline the main factors that will dominate the macroeconomic scenario in the coming months and we update our forecasts. In 2023, we expect GDP to grow by 1.3% and the inflation rate, still high, to stand at an annual average of 4.2%. Employment will continue to grow, albeit at more modest rates, and we expect the housing market to slow during the course of the year, with no sharp corrections. The budget deficit will remain at around 4% of GDP, the same level as we project for 2022.

The impact of the COVID-19 pandemic has been felt in the Portuguese real estate market with a reduction in sales and a slowdown in prices. All the indicators suggest that, over the coming quarters, the real estate market will continue to suffer a correction as a result of the uncertain environment, the fall in household incomes, the reduction in purchases by foreigners and the lower levels of investment in accommodation businesses.

After a January filled with a range of emotions (Venezuela, Greenland, etc.), the first quarter of the year will close with new changes in the tariff landscape, following the US Supreme Court’s decision to invalidate the legal path used by the Trump administration to redesign a significant portion of the tariff framework and, above all, with the intensification of tensions in the Middle East following the outbreak of the military conflict in Iran. This new twist in the geopolitical landscape will once again test the resilience shown by the business cycle in recent years, amid a spike in energy prices and uncertainty in the short term.

The evolution of the conflict in the Middle East remains key for the global outlook. Following the reopening of the Strait of Hormuz, the data show a somewhat erratic increase in trade flows, consistent with warnings from various international agencies that normalisation will take months. In addition, geopolitical uncertainty remains high and the complex dynamics surrounding the US-Iran agreement highlight its fragility.

The global economy will therefore continue to face major challenges in 2023, given the disruptive dynamics that continue to be present. With the unknowns regarding the performance of the Chinese economy and the evolution of the conflict in Ukraine, minimising the damage inflicted on the labour market by the current cycle of monetary tightening, as well as keeping the financial channel isolated from the noise, will be essential.

For the first time in years supply is unable to respond to the surge in demand which is occurring as a result of both the spending of pent-up savings accumulated during the lockdowns and the extraordinarily expansionary tone of economic policy. The risk is that the current mismatch becomes entrenched until well into next year, which could alter the global economy’s path to recovery.

All the indicators were suggesting that the growth of the Spanish economy was still strong, yet the latest GDP figure published by the National Statistics Institute has exceeded even the most optimistic expectations: the figure reveals a buoyant economy, especially taking into account the context in which it has occurred.

The outbreak of war between Russia and Ukraine requires a revision of the outlook for the Spanish economy, despite the high uncertainty surrounding the scope and duration of the impact.