The rating agency Fitch Ratings In its June macroeconomic report, it has revised its growth forecasts for the Spanish economy in 2023 seven tenths upwards, to 1.9%, but it has cut its estimates for 2024 by two tenths, to 1.6%.
Fitch highlights that, although consumption fell during the first quarter of 2023, economic activity continued to grow thanks to the boost in exports and tourism. On his side, Fitch points out that inflation in Spain has fallen “much faster” than in other large economies in the euro zone.
However, the ‘rating’ agency warns that “the impact of the tightening of financial conditions will weigh more and more on the financial perspectives”. In this sense, Spanish families have increased their mortgage prepayments. In the March document, Fitch already advanced that Spain was among the countries vulnerable to interest rate rises due to the large number of mortgages subject to variable rates.
Afterwards, the world economy will grow this year by 2.4%, four tenths more than estimated three months ago, according to Fitch, thanks to the fact that emerging markets except China will see their GDP rise by 2.9% in 2023, nine tenths more mainly due to the good performance of Brazil, India, Mexico and Russia.
However, Fitch predicts a rise of 2.1% in 2024, three tenths less, due to the delayed impact of interest rate increases on the economy and the ‘base effect’ in GDP growth in emerging countries.
On the other hand, China has added four tenths since the March report, to 5.6%, due to the post-covid reopening in the first quarter of this year, although “this recovery has weakened somewhat in recent months” . In 2024, the growth of the Asian giant will moderate to 4.8%.
As for the United States, Fitch has increased its advance by two tenths, up to 1.2%, due to the “robustness” of consumption and the rate of job creation. Despite this, the agency expects that the Fed’s monetary tightening will push the economy into “a mild recession” by the fourth quarter of this year or the first of next year. Looking at the whole of 2024, the world’s leading power will grow a meager 0.5%, three tenths less.
Returning to the Old Continent, the eurozone will see its economy grow by 0.8% and 1.4% in 2023 and 2024, respectively. These figures have not changed since March. Fitch explains that, although the gas crisis “has been further contained”, the monetary policy of the European Central Bank (ECB) offsets the positive effect by reducing costs. Outside the monetary union, the United Kingdom will fall into recession this year as its GDP contracted by 0.1%.
Interest rates and inflation
Fitch’s interest rate projections for the end of this year are 5.75% in the United States and 4.5% for the euro area, while they will be 4.25% and 3.75%, respectively, at the end of 2024.
Regarding inflation, the US economy will close the year in December with a rate of 3.6%, while the euro area will do the same with 4%. A year later, in 2024, the rise in prices will be contained at 2.7% on the other side of the Atlantic and at 2.5% in the euro zone.
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