The Organization for Economic Cooperation and Development (OECD) has joined other international organizations such as the International Monetary Fund (IMF) and applied the scissors to the forecasts for Spain and the rest of the world due to the impact of the war in Ukraine. , according to the ‘Economic Perspectives’ report, published this Wednesday. In the case of Spain, the agency has cut its growth forecasts for the gross domestic product (GDP) to 4.1%. This represents a downward revision of 1.4 percentage points with respect to the growth estimate of 5.5% published in the month of December. The estimate for 2023 has moved to 2.2%, from the previous 3.8%.
For 2022 as a whole, the OECD forecasts average inflation of 8.1% for the year as a whole, several percentage points above the 3.2% it estimated in December, the last time it published its full macroeconomic forecasts.
In 2023, the price increase will relax to 4.8%, above the 1.5% expected half a year ago.
The OECD has decided to undertake these reductions in growth forecasts due to the high uncertainty, inflation and the slowdown in external demand of the Spanish economy. From a positive point of view, the Paris-based body has highlighted household savings, the fiscal stimulus package against the effects of the war, the “continued recovery” of employment and European funds as aspects that will boost growth economic.
“The war in Ukraine is affecting the Spanish economy through higher energy prices, interruptions in production chains and greater uncertainty, since direct trade and financial exposures to Russia and Ukraine are limited,” he stressed. the entity chaired by Mathias Cormann.
With respect to the rest of the macro picture, the evolution of the labor market stands out again in a positive way. Since the pandemic began, the unemployment rate data has been better than estimated by international organizations. In December, the OECD projected that unemployment in Spain would be 14.2% in 2022 and 13.6% in 2023. The new forecasts place the unemployment rate at 13.6% by 2022, although the organization forecasts a slight uptick to 13.9% by 2023.
As far as the budget deficit is concerned, it will be 5% in 2022, four tenths less than forecast in December. By 2023, it will drop to 4.2%, the same ratio as forecast half a year ago.
Due to lower exposures to Russia, the cut in Spain’s forecasts compared to December’s projections is less than that suffered by the rest of the large euro economies. In this way, the prospects for Germany have been cut by 2.2 percentage points, to a GDP growth of 1.9% in 2022; while France will grow by 2.4% (1.8 points less) and Italy, 2.5% (2.1 points less).
