It estimates that the average annual inflation rate will drop three tenths in 2024, to 3% and the underlying rate will fall to 3.2%


The Funcas Panel predicts that the Spanish economy will grow by 1.6% this year, unchanged from what was expected last November, in an external context that continues to be considered unfavorable, according to forecasts published this Tuesday.

The panelists estimate an advance in the national Gross Domestic Product (GDP) of 0.3% and 0.4% in the first and second quarters, respectively, followed by increases of 0.5% in the last two quarters of the year.

Growth will be supported by national demand, which will contribute 1.7 percentage points, while the foreign sector will subtract one tenth, as estimated in the previous consensus. The slowdown compared to 2023 will be felt in consumption, both public and private, and in the foreign sector, while investment will show more vigor.

Regarding prices, experts point out that, after the moderation of the general CPI in the last months of 2023, the forecast for the average annual rate in 2024 drops three tenths, to 3%. The interannual rate for December would be 2.7%. Regarding underlying inflation, the forecast for the average annual rate is reduced by one tenth, to 3.2%.

For 2024, employment growth of 1.5% is forecast, one tenth less than in the November Panel, while the average annual unemployment rate would have been, according to consensus, 12.1% in 2023, and would fall to 11.7% in 2024.

For their part, the panelists maintain the public deficit forecasts at 4.1% and 3.6% of GDP for 2023 and 2024, respectively. Both figures are higher than those contemplated by the Government, the Bank of Spain and the main international organizations.

Regarding interest rates, the consensus expects that the deposit facility will begin a slightly downward path after this first quarter and would approach 3.25% at the end of the year.

Market interest rates would follow a similar trend, or even more pronounced in the case of public bonds. At the end of the year the Euribor would approach 3.25% – compared to the 3.6% indicated in the November Panel – and the yield on Spanish public debt with 10-year maturities would be close to 3%, half a point less than in the last consensus.