When you start a business it is essential not only to keep up to date with the legal and fiscal regulations of your country to achieve success, but also to know what is happening in your environment and how it could affect you. Therefore, in this article we explain the economic situation in Spain in 2022.
What is the economic situation in Spain in 2022?
As you may have already heard, Spain is an ideal country for business expansion and currently represents a competitive and open economy within the European Union.
However, two years after the arrival of the COVID-19 pandemic and with the current war between Russia and Ukraine, the economic forecasts for 2022 could change, as these conflicts affect investments and result in higher prices in the market.
In this regard, the International Monetary Fund makes it clear in its “World Economic Outlook (WEO)” report that the economic recovery that was talked about a few months ago has slowed down significantly today.
Thus, one of the factors that have generated this fact are the disruptions in supply lines as a consequence of the shortage of intermediate goods that affected the manufacturing sector in both the United States and Europe.
In addition, according to the National Statistics Institute (INE), the Government’s forecasts contemplated a 7% increase in GDP for 2022 and it is estimated that it may not even reach 3% by the end of the year.
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What does the Bank of Spain say?
The decline in GDP during the first quarter of 2022 was quite remarkable and with it comes to highlight an inflationary variant that affects daily life in Spain.
For this reason, the Bank of Spain is forecasting higher than expected core inflation for energy and food.
Ángel Gavilán, Director General of Economics and Statistics at the Bank of Spain, states that the percentage of goods and services registering inflation above 2% has risen considerably, from 25% in June 2021, to 65% in March 2022.
In relation to the Consumer Price Index, we know that it analyzes the impact of the increase in the prices of consumer goods in a country, and in this case it is stated that in the course of 2022 it has been noted that households with lower income have an inflation rate 1.2 percentage points higher than those with higher income.
Likewise, fuel, gas, food and electricity are considered the main aspects that have the greatest impact on households.
The State considers it necessary to take measures to avoid possible effects that could worsen Spain’s economic situation for the remainder of the year. In addition, the Bank of Spain insists on increasing consumption taxation for products and services to the general rate (21%).
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Stability program 2022-2025
As its name indicates, this program highlights the macroeconomic scenario from 2022 to 2025, for which it establishes that the Spanish economy will continue to grow steadily, forecasting a GDP growth rate of 3.5% for 2023.
On the other hand, emphasis continues to be placed on the creation of quality jobs, as well as on investments in capital goods and intellectual property that will contribute to the country’s economic recovery.
With respect to the aforementioned rise in prices and inflation, expert forecasts point to a significant slowdown in inflation starting in the second half of 2022.
Similarly, taking the Transformation Recovery and Resilience Plan as a support point, it is estimated that investments will accelerate to 9.3% and thus contribute to the economy, together with a dynamism in tourism activity.
During the 2022-2025 period, it is expected to observe a decrease in terms of the existing unemployment rate, which is expected to drop from 14.8% (in the year 2021) to 9.6% (by 2025).
However, we cannot overlook the uncertainty generated by the current international context, which is why the macroeconomic picture also foresees that external demand could negatively affect growth both in 2022 and 2023.
In addition, taking into account public policies will serve as a starting point to minimize the effects of the war between Russia and Ukraine and contribute to Spain’s economic situation.
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Let’s remember that the Spanish business sector is quite developed nowadays, which means that it has a good margin of internalization and, despite the concerns that the economic sector may have, keeping informed with TAS Consultancy will always be the best alternative. Visit our blog and discover more of the news in Spain!