No slowdown and even less recession in sight in Spain. Economic growth surprised by prancing to 5.5% last year in the country, above the 4.4% of 2021 and the government’s objectives. The International Monetary Fund (IMF) had better anticipated Iberian growth but was counting on 5.2% thanks to the stronger than expected rebound in the tourism sector following two years of health crisis.
According to the INE statistical institute, this performance is driven by household consumption and the sharp rise in investment, particularly in the spring. Over the period from April to June alone, the gross domestic product (GDP) of the fourth largest economy in the euro zone grew by 2.2%.
On the other hand, activity decelerated markedly in the second half of the year (+0.2% growth in the third and fourth quarters), at a time when inflation hardened. The peak of inflation was reached in July at 10.8%, according to the INE. Over the year as a whole, prices rose by 8.4%, below the annual average for the euro zone, before falling to 5.7% in December.
State aid and derogation from the European electricity market
To contain measured inflation, Madrid released nearly 45 billion euros last year in the form of household aid and tax cuts, including a new tranche of 10 billion in December.
Above all, the Spanish government obtained from Brussels to temporarily free itself from the European electricity market and thus limit the surge in bills in homes and businesses.
In mid-January, the Spanish Minister for Ecological Transition, Teresa Ribera, declared that she would ask the European Union to extend the Iberian exception to the European electricity price mechanism. This derogatory regime should in principle end on May 31.
Commenting on the growth figures, Economy Minister Nadia Calviño said she was pleased that Spain had “demonstrates resilience in the face of headwinds”rejoicing that Spanish growth is at “way above” of the European average, expected at 3.3% by Brussels.
For 2023, Madrid expects growth of 2.1%, a more optimistic scenario than that of the IMF, which is betting on 1.1% and considers that the Spanish economy should not return to its previous level. – health crisis before 2024.