Mapfre Economics cuts its growth forecast for 2023 in Spain to 1%, which will be "saved" from recession

At least a third of the world's economies will enter a technical recession next year, including Germany and the United Kingdom.

Mapfre Economics cuts its growth forecast for 2023 in Spain to 1%, which will be "saved" from recession

At least a third of the world's economies will enter a technical recession next year, including Germany and the United Kingdom


Mapfre Economics, the Mapfre study service, has revised upwards three tenths the growth forecasts for the Spanish Gross Domestic Product (GDP) for 2022, to 4.4%, but has cut its estimates for almost one and a half percentage points. 2023, from 2.4% to 1%.

"Despite the cut, the country will be saved from the recession and will end 2023 with a growth of 1%", it is specified in the report 'Economic and Sectoral Outlook: perspectives for the fourth quarter', published this Monday.

Despite the fact that Spain is saved from recession, the report warns of the possibility that growth in 2023 will fall even further, to 0.6%, if high energy costs persist, as well as their gradual impact on services.

If so, they warn that "it would be difficult to avoid second-round effects." They also consider that interest rate hikes will have effects on the credit markets, with higher costs, an increase in non-performing loans and a possible credit crunch.

On their side, the experts point out that, for the time being, employment levels are holding up, since according to official figures, almost 30,000 jobs have been created each month in seasonally adjusted terms. But they warn that the tightening of financial conditions and the deterioration of private consumption "may be reflected in a rebound in unemployment."

As for the world economy, the Mapfre study service estimates that it will grow a little more in 2022 than was expected in July, going from 3% to 3.2%. However, he expects a bigger hit for 2023, with a smaller rebound of 2.7%.

This is what The data suggest that, starting in the last quarter of this year, the economic cooling will begin to be felt as a result of high inflation, the price of energy, the tightening of monetary policy and the war in Ukraine. In addition, from Mapfre Economics they have warned that the possibilities of a worse scenario crystallizing have increased, which would lower global economic growth to 2% in 2023.

The blow will be greater in Europe than in the United States. The estimates of the experts at Mapfre Economics suggest that the eurozone will have three consecutive quarters of contraction, which implies that the GDP will remain around zero next year.

In contrast, the US is expected to start 2023 in recession and recover by the spring, ending next year with a modest 0.2% growth. These figures, however, could worsen if the inflationary escalation does not stop and financial conditions continue to tighten; in this case, a contraction of -0.5% is forecast for the US and -0.3% for the euro zone.

However, from the study service they foresee that at least a third of the world economies will enter a technical recession next year, including Germany and the United Kingdom, whose GDP will fall to 0.4%.

In the opposite path to that of the rest of the economies, China is expected to have lower growth in 2022 than in the next year. Estimates suggest that this year's GDP will be 3.2% due to the impact of the zero Covid policy; and that the rate will grow to 5% in 2023. In any case, from Mapfre Economics they warn that the tensions with the United States, the dispute over the independence of Taiwan and financial vulnerabilities, maintain a high level of uncertainty in the international arena.

Another factor of high uncertainty is debt. The report specifies that, "in a context in which the successive increases in interest rates by the main economies to combat inflation are consolidated, the sustainability of the debt begins to deteriorate rapidly". The fear is greater among the emerging countries, although they also ask for caution among the large economies.

The report includes an analysis of how the forecasts affect the performance of the insurance sector. Analysts acknowledge that the tightening of monetary policy and the possible recession in the main economies will negatively affect the insurance markets, particularly in the eurozone.

Until now, they point out that the sector has registered an increase in the volume of premiums, but they believe that it is insufficient given the rise in inflation, which affects profitability.

This is the case of Spain, where the dynamism of the economy has allowed significant growth in premiums (5.7% and 5.6% in the 'Non-Life' and 'Life' businesses, respectively, in year-on-year terms up to the month of September), but without compensating for the rise in prices.

According to the report, the adjustment in financial markets is also having an adverse impact on the valuation of sovereign bonds and risk assets. On the positive side, the environment for the Life savings insurance business has generally improved, and the automotive sector is beginning to overcome the problems of shortages of supplies and semiconductors that were weighing down registrations, although there is a tightening of the conditions for the financing of the acquisition of new vehicles.