The OECD improves its growth forecast for Spain in 2023 to 1.7%

Much has been said during the pandemic that economic forecasts had become a roller coaster, subject to how fast the virus spread and how reactive governments were in modulating health restrictions. Now, the elaboration of forecasts is more like an accordion that expands and contracts depending on how the various nails that the economy has driven into its flank evolve, from inflation to monetary policy or bottlenecks in supply chains. . Spain does not escape these ups and downs either: the Organization for Economic Cooperation and Development (OECD) has raised its estimate of GDP growth to 1.7% for 2023, an improvement after the cut last November (1.3% ). For 2024, it keeps its forecast fixed at 1.7%. The body also raises its forecasts for the euro zone and the world economy. But he warns that it is a “fragile recovery”, where there are still many unknowns.

In its update of the economic forecasts for the G-20 countries, published this Friday, the OECD recalls that global growth slowed down in 2022 and closed at 3.2%, well below the expectations that were initially held. The exercise. The main reasons for this worse performance are clear: the Russian invasion of Ukraine with the consequent domino effect that it has caused in the economy, from the rise in inflation to the rise in interest rates, to which are added the backlash of the pandemic, with the slowdown of the Chinese economy and the imbalances that persist between global demand and supply.

Now, after a turbulent year in which, fortunately, the worst forecasts were not fulfilled, the organization assures that positive signs are beginning to be glimpsed. Consumer and business confidence has improved, prices are being contained and the Asian market is reactivating. However, the agency’s analysis does not include the panic that has been unleashed in the markets in the last week due to the bankruptcy of several regional banks in the United States, a fear that has reached Europe, has once again stirred up the specter of the financial crisis and It is calling into question the actions of the central banks, which have been raising rates for months to fight inflation.

In fact, the OECD points out that inflation is moderating, but that the underlying index continues at high levels due to the increase in the price of services, the higher margins in some sectors and the pressures of a tight labor market. It is expected that in 2023 and 2024 it will continue to fall gradually, but that in many countries it will continue to be below the target of central banks (2% for the ECB) until the end of the period. In Spain, he believes it will stand at 4.2% in 2023 and 4% in 2024.

For this reason, the agency considers that monetary policy should continue to be restrictive. “More rate hikes are still necessary in several economies,” he details in his report, in which he makes explicit reference to the euro area and the United States, and once again insists that the aid deployed to mitigate inflation be focused on the most vulnerable .

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