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Last year, when we witnessed the heavy blow that the pandemic dealt to the economy, an intense debate began regarding what shape the recovery would take. The more pessimistic predictions opted for somewhat disheartening letters, such as L, W or K.

Spain’s National Statistics Institute has revised the growth of recent years upwards and the flash indicators for Q3 point to an improvement in private consumption, despite the slowdown in the labour market in the quarter. Inflation unexpectedly fell to 1.5% in September, while housing demand was higher than expected.

With a divided Congress, and in a highly polarised political environment, it seems unlikely that Joe Biden’s government will be able to push through proposals that drift far from the centre of the political spectrum. Not only that, it could also have difficulties in pushing through basic measures such as raising the debt ceiling.

As a result of the deterioration in the expectations for the growth of oil demand, we have considered it appropriate to revise our baseline scenario for energy prices, although we are aware of the difficulty of incorporating the uncertain geopolitical scenario into the forecasts.

In the run-up to the Asia-Pacific Economic Cooperation summit, Donald Trump’s Asian tour has led to a certain thaw in US-China trade relations, in a quarter marked by contrasts among advanced economies and dynamism among emerging markets.

The economy continues to enjoy strong growth, with domestic demand acquiring a more prominent role, largely supported by the buoyancy of the labour market. Electricity keeps inflation at around 3%, while house sales buck the upward trend for the first time since 2024.

The Spanish economy has once again exceeded our expectations in the opening months of 2024. While the GDP growth figure for the final quarter of 2023 was higher than expected, that of the first quarter of this year confirms the good performance of Spain’s economy and leads us to revise our forecasts upwards. Let’s re-examine the main factors that will determine the outlook for Spain’s economy, after incorporating the latest available information.

The Spanish labour market has changed its growth pattern since the pandemic, showing an increase in employment in sectors such as health, education and technology. Is this new model favouring an increase in productivity? We analyse the impact of the composition effect and how it compares with other expansive cycles.

While economists have been incorporating big data into their analyses for a number of years now, the COVID-19 pandemic has produced a veritable revolution in real-time economics. The latest contribution from the CaixaBank Research team to this revolution is the Real-time economics portal, launched on 8 November 2022.

This year’s return to fiscal rules – as safeguards of the sustainability of public debt – and the persistent shortfall in investment needed to address the EU’s priorities in the current geopolitical context create a scenario marked by frictions that requires a coordinated fiscal strategy that far exceeds the horizon of national and EU political mandates, both in duration and ambition. Therefore, it is essential that the differences that exist, as well as some taboos that have characterised the EU’s economic history on other occasions, are overcome.

It is surprising that the US labour market, known for being one of the most flexible in the world, is taking so long to regain normality, given that GDP recovered pre-pandemic levels back in Q2 2021. Is this a transitional phenomenon or a sign of structural change?

Although the exposure of Spanish employment to US demand is limited in aggregate terms, its impact varies considerably from sector to sector. Activities such as manufacturing (especially in pharmaceuticals), air transportation, professional activities and ICT have closer links, together with the sale and repair of vehicles.

The economic recovery in the euro area continued during Q2, but it began to lose momentum in June. The Purchasing Managers’ Index (PMI) for the euro area remained at levels compatible with positive growth in June, but disappointed by falling with respect to the previous month, weighed down by an industrial sector that is slipping deeper into recession.

As the age-old saying, which is so topical in light of the war in Ukraine and the energy crisis, puts it: «hope for the best, prepare for the worst».

The energy crisis has served as an incentive within the EU to accelerate the transition to energy sources that are more environmentally friendly and less dependent on fossil fuels, but this is seen as more of a medium-term goal.