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The income balance in Spain shows a historical structural deficit, which is closely linked to the Spanish economy’s debtor position vis-à-vis the rest of the world. However, the deterioration it has suffered in 2023 is closely linked to the rise in interest rates.

This article sets out CaixaBank Research’s new forecasts for inflation in Spain in 2024 and 2025.

We go over what is meant by the so-called «base effect» and analyse how it could impact the course of inflation in Spain during 2023.

Three and a half years later, Spain’s GDP has finally recovered to the pre-pandemic level. However, the recovery of the Spanish economy has not occurred in unison: some aspects have improved more quickly, while others are lagging further behind.

It is important to continue balancing a more flexible labour market with the safety net of the welfare state to safeguard employment and tackle Spain's markedly dual labour market that puts the most vulnerable at a disadvantage.

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.

Spain included 28.4 billion euros from the Recovery and Resilience Mechanism, NGEU’s main instrument, in the 2022 General Government Budget. Have expectations been met? Are the investments and reforms being implemented as planned?

Spain’s foreign sector has produced very good results and shown a remarkable resilience to numerous adverse economic events in the last decade. Will it maintain its competitiveness in the current inflationary context?

Although Spain’s exports have been surprisingly strong in the current context, this good performance stretches back a long time. It began during the financial and sovereign debt crisis of a decade ago, when many Spanish companies were forced to look abroad for business opportunities in the face of weak domestic demand.

Compared with its main rivals, Spain is automated to a similar degree but its level is not improving fast enough to catch up with the leading economies.

We analyse individual CaixaBank customers’ direct debit electricity bill payments in order to understand how Spanish households’ electricity bills have evolved in 2022.

In 2022 all households had to allocate a greater percentage of their income to paying their electricity and gas bills. However, the additional effort required to pay for energy consumption was not the same for everyone. In this article, we estimate that effort based on internal CaixaBank data.