The Government will lower the growth of 2022 from 7% to around 4.5%

The new table of macroeconomic forecasts that the Government plans to approve this Fridayfor its submission to the European Commission, will be in line with the previous estimates of international and national organizations (between 4.8% and 4.5%), “but with an approximation of maximum prudence”, as admitted this Wednesday the First Vice President and Minister of Economy, Nadia Calvino, in an interview on Telecinco. The vice president also announced that the Council of Ministers will approve next Tuesday the agreement adopted by Brussels to put a cap on the price of gas used in electricity generation (40 euros initially and 50 euros later), “and will enter into effective immediately”.

Between 4.5% and 4.8%

The IMF has lowered its growth forecast for the Spanish economy for 2022 to 4.8%. The Bank of Spain has placed it at 4.5%, after having also incorporated the possible effects derived from the war in Ukraine, the rise in energy prices and higher inflation. The official government forecast still stands at 7%. “Will the new forecast of the Government be placed within the range of the Bank of Spain and the IMF?” It is the same question that Calviño was asked this Wednesday on Telecinco and on Tuesday night in another interview, on Onda Cero. “It will be around there,” he replied on the radio station. “It will be aligned with the organizations, but with an approach of maximum prudence, due to the situation of uncertainty,” he added on Telecinco, using an expression that points to the lowest area of ​​the range, 4.5%.

Even below that reference, the Independent Authority for Fiscal Responsibility (Airef) has also recently lowered its growth forecasts, to 4.3% for this year (from its previous estimate of 6.3%). The Savings Banks Foundation (Funcas) forecasts a rate of 4.2% for 2022.

And forecast cuts affect all the world’s economies. This same Wednesday german government has placed the forecast growth for this year at 2.2%, this is 1.6 points less than the previous projection.

The vice president explained this Wednesday that the daily data on employment, tourism or investment point in the direction of a strong recovery of the Spanish economy. In fact, the IMF places Spain among the developed countries with the highest growth this year (only behind Ireland in the euro zone). However -Calviño added- the prospects are “weighed down by the foreign sector”, to the extent that the war in Ukraine is affecting the energy pricesinflation and international trade.

Macroeconomic table until 2025

The government must incorporate its new macroeconomic forecasts for this year and until 2025 in the update of the Stability Plan that must be sent to the European Commission before April 30. That plan will also include the path of deficit and debt targets of public administrations for the period 2022-2025. According to the vice-president, a meeting of the Delegate Commission of the Government for Economic Affairs this Friday in which the document will be approved, after having incorporated the information provided by the Active Population Survey (EPA) that the National Institute of Statistics must publish this Thursday and the advance of the data of the GDP of the first quarter of the yearwhich will be known on the same Friday.

The update of the 2022-2025 Stability Plan is the basis on which the Government must begin to draw up the State Budget project for 2023. The Bank of Spain cut its growth forecast for next year to 2.9% and the IMF has placed it at 3.3%.

“Inflation will not reach 10%”

Calviño trusted that the inflation data for April, which will be released this Thursday, will not reach 10%: “Our forecast is that the peak of inflation was reached last month.” In March, inflation reached 9.8%.

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The vice president expressed her confidence that the rise in prices will moderate in the coming months thanks to the measures adopted by the Government in the royal decree against the effects of the war that the Congress of Deputies will put to a vote this Thursday and the agreement reached with the European Commission to put a cap on the price of gas used in electricity generation.

The royal decree extends until the end of June the fiscal measures to alleviate the rise in the electricity bill, such as the reduction of VAT on electricity to 10%. The decree also includes a discount of 20 cents per liter on all fuels, also until June, among other measures. Based on the data on the evolution of inflation, the Government will have to decide whether to extend the aid during the second half of the year. For its part, the cap on the price of gas used in electricity generation will be in force for twelve months, which should help contain the evolution of inflation.