Spain will avoid recession in 2023 thanks to activated tax aid


The central stage that continues to drive Mapfre Economics, Mapfre’s research service, is that of stagflation, that is, economic stagnation and high prices. The global growth by 2023 will be 2%, seven tenths less than expected in October last year, with hardly any contribution from developed markets, both from Europe and the United States, said Gonzalo de Cadenas-Santiago, director of macroeconomic and financial analysis at the research service. “Only the emerging countries, with Asian countries at the forefront, would partially compensate (however, China will grow less than in recent years). Regarding inflation, it will go towards more sustainable rates around 2023 and 2024, but without reaching the objective that the central banks are looking for, ”the expert asserted during his intervention.

In his speech, Cadenas-Santiago warned about recovery, where he anticipates an asynchrony in the landing, with a very weak recovery, with low demand, caused by the change in less lax monetary conditions due to the rise in central bank interest rates and a drop in income. All in all, the recovery “would begin in the second half of 2023, and this would be very irregular and with differences between regions, with some price problems due to supply interruption, but without reaching 2020 levels.”

Nevertheless, Spain will avoid the 2023 recession. Experts from the Mapfre research service believe that the Spanish economy will grow by 1% in 2023, four tenths more than in the previous October calculation. This improvement is due to the tax aid that has been activated and “to the still manageable financial costs”. However, from Mapfre they recognize that these tax aids, once the economic improvement occurs, will be withdrawn. By 2024, economic growth will be 2.1%. This growth contrasts with the economic evolution of the euro area, which could end with a negative economic growth in 2023 with -0.1%, with countries like Germany at the forefront, since it would register a negative decrease of -0.9%. The perception is that the European Central Bank (ECB) will continue raising interest rates, which would affect consumption.

Cadenas-Santiago warns that the future is fraught with risks. In addition, of those already known as the climate, the debt there are two new ones, such as the energy markets and the real estate crisis in English-speaking countries.

Perspectives for the insurance sector

As soon as the insurance sector follows the panorama it faces is very complex. In 2022, it faced two problems: high and, moreover, unexpected inflation and, on the other hand, the strong correction of the emerging markets. “There was nowhere to go and portfolio diversification hasn’t worked.” Despite this, Ricardo González, director of Analysis, Sector Studies and Regulation, believes that there are opportunities because inflation is already known and expected.

In this scenario, “the outlook in terms of future profitability of investment portfolios, used by the insurance sector to complement its technical profitability, improves, taking into account the privileged position of insurance companies in terms of their high liquidity and low level of of leverage, due to the characteristics of its business model”, explains González.

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