The Spanish economy managed to grow 5.5% in 2022 despite inflation and the war in Ukraine

The Spanish economy surprised in 2022 with growth of 5.5%, the same growth rate as in 2021 and well above the latest official government forecast of 4.4%. According to the data advanced this Friday by the Statistics National Institute (INE) -which will not be definitive until March 24- the Spanish economy advanced 0.2% in the fourth quarter of 2022 compared to the previous one (the same as the data revised now for the third quarter), which raises to 5.5% estimated growth for the whole year.

Thus, in the year of the war in Ukraine and the highest inflation in forty years, the Spanish economy also managed to beat the December estimate of the Bank of Spain, when the body forecast an advance of 4.6% for the whole of 2022. , and even the most recent from the International Monetary Fund (5.2%). After a collapse in GDP of 11.3% in 2020, the Spanish economy has managed to chain two consecutive years with increases of 5.5% which, in any case, still do not allow it to have recovered its pre-pandemic level.

The data published this Friday by the INE confirm that the recovery of the Spanish economy It was intense in 2022 as a whole, although the year ended with a sharp slowdown in the second half that anticipates the slowdown that all analysts point to for 2023. Specifically, the INE estimates that GDP grew in the fourth quarter of the year 0.2%, after having advanced 0.0%, 2.2% and 0.2% in the first, second and third, according to the series updated this Friday by the INE. The International Monetary Fund has lowered its forecast for 2023 to 1.1% and the Savings Banks Foundation (Funcas) foresees a rate of 1.3%. Such is the dimension of the slowdown that is expected for 2023.

It is the same profile that, how could it be otherwise, showed the data from the Active Population Survey (EPA) on the labor market this Thursday: good data for the whole of 2022 but with alarm signals in the final stretch.

Fall in consumption and investment in the final stretch

“In an international context of great uncertainty, marked by the consequences of Russia’s war in Ukraine, the Spanish economy has shown great strength and resilience,” underlines the Ministry of Economy after learning the data published by the INE.

In the year 2022 as a whole, GDP at current prices reached almost €1.33 trillion (1,328,922 million euros), which is 10.1% more than in 2021. If we discount the inflation impactthe growth of the Spanish economy in real terms is limited to just over half, 5.5%, after subtracting the GDP deflator.

Although the GDP managed to grow in the fourth quarter (0.2%) and managed to avoid the forecasts of a fall that were going to introduce Spain into a technical recession (two consecutive quarters of quarterly falls in GDP), the truth is that the analysis of the data for the last three months of 2022 shows a clear slowdown profile of the Spanish economy. The household consumption it fell 1.8% in real terms in the fourth quarter of the year compared to the third. also fell the investment of companies (-1.2%). In addition, the exports (-1.1%), although they did so with less intensity than the imports (-4.2%).

By sectors of activity, the puncture in the fourth quarter was noticeable in the building (-0.3% compared to the third quarter), in trade, transport and hospitality (-0.6%) and in artistic and recreational activities (-7%). However, he endured farming (quarterly increase of 4.3%), the industry (0,1) and activities real estate (2% more than in the third quarter).

The bite of inflation

In order to build an idea of ​​the bite that inflation given to the growth of the economy in 2022, with the data for the fourth quarter that the INE published this Friday, it is enough to observe that, although the families they spent 8% more in the fourth quarter of 2022 than in the same period of 2021, in real terms their consumption only grew 2.6% (the difference went into price increases).

In the case of investment the companies, the gap is much larger. Although in the fourth quarter of the year companies allocated 5.4% more to gross fixed capital formation than in the same period of the previous year, in real terms there was a fall of 5.5%. In the case of exportsthe nominal increase of 19.3% translates into a year-on-year increase of 7.6% in terms of volume.

Overall, the economy grew 8.1% in nominal terms compared to the fourth quarter of 2021, although in real terms the growth was reduced to 2.7% (with a GDP deflator of 5.4% for the fourth quarter). ).

Benefits grow 2.7 times more than the wage bill

The INE data also allow us to analyze How was the growth distributed? of the economy in the fourth quarter from the point of view of the different sources of income.

If in nominal terms, GDP grew in the fourth trimester 8.1% compared to the same period of the previous year, the INE data show that the business benefits rose 16.9% while the wage bill advanced much less, 6.3%, due to the combination of a 2.4% increase in the number of employees (seven tenths less than in the previous quarter) and a 3.8% rise in average remuneration for each one of them (compared to 2.2% in the third quarter).

Employment and hours worked

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In terms of full-time equivalent jobs, INE data points to an increase of 2% in the fourth quarter of the year compared to the same period of the previous year. This variation confirms the downward trend throughout a year that began with a 5.3% growth in the number of full-time equivalent employees.

The slowdown is also observed in the number of hours worked, which has gone from growing 7.1% in the first quarter to an interannual variation of 2.7% in the fourth.