The Organisation for Economic Co-operation and Development (OECD)’s analysts, in their new economic growth projections for 2022 and 2023, have revised Spain’s gross domestic product (GDP) growth for 2022 upwards by three tenths of a percentage point to 4.4% compared with their June estimate. Meanwhile, they have lowered their projection for Spanish GDP growth in 2023 by seven tenths of a percentage point to 1.5%.
With regard to inflation, the analysts have raised Spain’s average CPI growth rate in 2022 to 9.1% (8.1% previous estimate) and to 5.0% in 2023, (4.8% previous estimate).
OECD analysts have also cut their growth estimates for global GDP in their latest update. They now expect global GDP to grow by 2.2% in 2023, down from their previous estimate of 2.8%. In its report, the OECD indicates that, despite the boost to activity following the waning impact of the pandemic, global growth will remain subdued in the second half of the year. It also points out that the key factor in the slowdown in growth is the widespread tightening of monetary policy, driven by the higher-than-expected rise in inflation.
In addition, they flag that China’s strict containments to combat the pandemic are also impacting global economic growth. They also point out that inflationary pressures are widening, pointing to tight labour markets boosting wages. This helps mitigate the loss of purchasing power, but also contributes to generalised inflation. According to the OECD, such wage growth has strengthened in the US, Canada and the UK.
OECD analysts expect inflation to remain high, but to peak in the current quarter and decline over the course of the next quarter and 2023 in most countries. In this regard, they point out that the US will see more progress in reducing inflation than the Eurozone or the UK. Furthermore, with the recent rise in energy costs and the tightening of monetary policies in Europe, still lagging behind the US, both headline and core inflation are expected to remain elevated.