Banco de España – Statistical Bulletin. November 2024
Economic Activity
- The Spanish economy continued to grow in the third quarter of 2024, with GDP increasing by 0.6% quarter-on-quarter.
- This growth was driven by a recovery in private consumption and investment, as well as a continued expansion in exports.
- The labor market remained strong, with employment increasing by 0.4% quarter-on-quarter and the unemployment rate falling to 12.2%.
- However, there are some signs that the economy is starting to moderate, with business confidence and investment intentions declining in recent months.
Inflation
- Inflation remained elevated in October 2024, with the headline CPI increasing by 2.5% year-on-year.
- This is above the European Central Bank’s target of 2.0%, but is still below the peak of 3.2% reached in March 2024.
- Core inflation, which excludes volatile items such as food and energy, also increased in October, rising by 2.0% year-on-year.
- The Bank of Spain expects inflation to moderate in the coming months, but to remain above target in the medium term.
Monetary Policy
- The European Central Bank (ECB) left its monetary policy settings unchanged at its meeting in October 2024.
- The ECB’s main refinancing rate remains at 0.50%, and its deposit rate remains at -0.50%.
- The ECB also announced that it would continue to reinvest the proceeds from maturing bonds under its asset purchase program until at least the end of 2024.
- The Bank of Spain expects the ECB to keep its monetary policy accommodative in the coming months, but to start to raise interest rates in 2025.
Fiscal Policy
- The Spanish government’s budget deficit was 3.5% of GDP in the third quarter of 2024, which is higher than the 2.5% target set by the European Commission.
- The government is planning to implement a number of measures to reduce the deficit, including tax increases and spending cuts.
- The Bank of Spain expects the government to meet its deficit target in 2024, but warns that the fiscal outlook is challenging in the medium term.
Outlook
- The Bank of Spain expects the Spanish economy to continue to grow in 2025, but at a slower pace than in 2024.
- The Bank forecasts GDP growth of 2.0% in 2025, down from 2.5% in 2024.
- The Bank also expects inflation to moderate in 2025, but to remain above target at 1.8%.
- The Bank’s outlook is subject to a number of risks, including the war in Ukraine, the energy crisis, and the global economic slowdown.
Banco de España – Statistical Bulletin. November 2024
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