The General Council of Economists (CGE) has revised upwards its growth forecast for the Spanish economy. It now expects Gross Domestic Product (GDP) to grow by 2.4% in 2024, which is two tenths of a percentage point higher than its previous forecast.
The good performance of private consumption, the recovery in investment and, above all, the good performance of exports and especially tourism have been the main drivers of Spain’s 0.8% growth in the first quarter.
As they explain, this higher growth has been fundamentally due to the good performance of private consumption, the recovery of investment after two negative quarters and the better evolution of exports, which have increased by 3.3% in the quarter compared with 2.8% in the previous quarter. In fact, the contribution of foreign demand to quarterly growth was 0.5 tenths of a point, compared with 0.3 of a point for national demand.
Moreover, part of this growth in the first quarter is due to the increase in tourism services, which in the first four months of 2024 has exceeded expectations, making it the best start to the year in history.With the economy growing faster than expected and improved forecasts for the rest of the year, mainly in the second and third quarters, tax revenues are expected to increase. They estimate public debt at the end of the year at around 106% of GDP, which is six-tenths of a percentage point lower than the previous forecast.
As for prices, they expect the extension of certain measures adopted by the government on 26 June (Royal Decree-Law 4/2024 of 26 June) to maintain and even reduce both headline and core inflation below current levels.
Therefore, they maintain their forecast for the average Consumer Price Index (CPI) at 3.2% in 2024.
On the unemployment rate, they improve their forecast by two tenths to 11.2% by the end of this year. However, they point out that, despite the good evolution of both the number of unemployed and the number of Social Security registrations, the unemployment rate is still much higher than in other euro area countries.”Despite the good performance of the economy according to the macroeconomic data that are being published, there are factors that may affect this performance, some exogenous, such as geopolitical tensions, and others endogenous to our economy, such as the high level of debt with the financial cost involved, the high rate of unemployment and the dependence of our economy on the service sector, especially tourism,” they point out.
