Debt control and productivity will condition the Spanish economy
Spain faces 2023 with moderate optimism and will manage to weather the recession, but its growth will be weak. The economists gathered at Spain Investors Day agree on this approach, although they warn that there are risks such as the high level of debt and the effects of the energy crisis. In this sense, the greatest challenges facing the country involve achieving an increase in productivity, creating a favorable environment for public-private collaboration, and controlling public finances.
Spain’s public debt reached a record figure of 1.5 trillion during the third quarter of the year, up to 116% of GDP, influenced by the use of anti-crisis measures. Although it represents a cut compared to the 120% that marked in 2020 due to the outbreak of the pandemic, experts such as the president and CEO of the economic team, Ricardo Martínez Rico, warned that the sustainability of public accounts is one of the biggest challenges.
The chief economist at Deloitte Spain, Ana Aguilar, highlights the importance of the Spanish GDP not going to experience a contraction, something that she sees as positive in a context of uncertainty like the current one. This forecast is in line with the forecast being considered by the European Commission, which, although it has lowered growth to 1.1%, is seven tenths above the euro zone average (0.3%) and well above from Germany or Switzerland, for which a contraction is expected. Moncloa projects a growth of 2.1% for this 2023.
High inflation has become another major challenge for world economies. In Spain, the leading indicator places the CPI at 5.8% in December, the lowest rate in a year. Given this situation, the director of Macroeconomics and International Analysis at the Fundación de Cajas de Ahorros (Funcas), Raymond Torres, foresees that it will maintain its downward trend and it will be in March when the impact of the precious energy prices on the data for C.I.P.
He shares a vision with the chief economist of BNP Paribas, Frédéric Pretet, who considers that the increase in prices in Spain will be more moderate than in Europe because its rise is more conditioned by energy and food costs. In fact, the underlying rate, which excludes these two variables, was higher in December, climbing to 6.9%.
Companies focus on reindustrialization
Within the framework of this economic scenario, companies such as Endesa, Gestamp, Indra or Rovi are asking to accelerate reindustrialization at the national level to avoid the excess weight of activity related to services and dependence on the production of third countries such as China. Thus, the CEO of Endesa, José Bogas, has highlighted reindustrialization as a critical factor so that it can contribute more to the economy, at the same time that he has called for “fleeing from ideologies” in the reform of the European electricity market.
If the health crisis opened the debate on the need not to depend on third countries in critical sectors, the global supply crisis has put the use of renewable energies and the electrification of the electric vehicle on the table. “We need factories to produce electric batteries,” remarked the president of Gestamp, Francisco Riberas.
In this regard, Indra’s CEO, Ignacio Mataix, has focused on increasing defense spending in the 2023 General State Budget (PGE), which will translate into “a great opportunity” to develop technology “key”, after the problems in the global chains. From ICEX, its general director, María Peña, points to renewables, cloud technologies and the automobile as four priority sectors, in order to attract foreign investment. The recipe is to identify the barriers “that make it difficult” for foreign capital to enter.