Although uncertainty remains on the horizon, the Spanish economy is holding up better than forecast. The slowdown in activity in the second half of 2022 has not crossed the line of negative growth, and most forecasts are being revised upwards. This is also the case of the Independent Authority for Fiscal Responsibility (Airef), which estimates that last year it closed with a growth of 5.3%, which means an upward revision of 9 tenths; and that in 2023 it will be 1.6%, in this case one tenth more than its previous calculation.
The reason for this review by the Fiscal Authority is a better than anticipated end of 2022, and an improvement in the assumptions about the prices of energy materials that will have an impact this year. The main source of revision in 2022 comes from the incorporation of updated national accounting data and also from a better growth forecast for the fourth quarter.
Airef also modifies its inflation calculations. In this case, it lowers that of 2022 by five tenths, to 8.4%, due to the moderation that energy prices have recently experienced. The moderation in industrial and energy prices has led to a faster-than-expected decline in energy inflation late last year. Instead, the correction is in the opposite direction for this year. Here, Airef raises its inflation forecast by three tenths, until it stands at 4.2%. The reason is that although energy prices have behaved better than expected, at the same time it is detected that there is a greater persistence of the increase in other components of the CPI.
Regarding the public deficit, Airef worsens the 2022 forecast by two tenths, up to 4.5%, due to the latest measures adopted by the Government that have increased spending and also due to the latest budget execution data. It also indicates that the rate of deficit reduction in recent months is maintained, placing it at 3.4% in October, although until the end of the year it is expected to worsen to 4.5%, due to the spending measures approved.
On the other hand, the Fiscal Authority certifies the increase in collection. Until November, tax revenues grew by 15.9%, thanks especially to personal income tax, VAT and Corporation Tax. An increase that occurs despite the fact that the measures adopted to reduce the escalation of electricity prices, has caused a reduction in income.