Focus on Spain: macroeconomic projections and fixed income view

Under our scenario and assumptions, Spanish GDP is projected to grow at 4.2% in 2022, moving below 2% in 2023, significantly below Banco de España projections for 2023 and 2024 at 2.8% and 2.6%, respectively, as we expect the current environment of higher energy and gas prices and high inflation to negatively affect consumers, companies and activity.

Based on the assumption of much tighter financial conditions than previously expected (partly as a result of the monetary policy normalisation or tightening process undertaken by the main central banks worldwide), we now see an additional factor contributing to a stronger moderation in the rate of growth of activity.

While not expecting a contraction, we expect to see sub-par growth between the end of 2022 and early 2023 as inflation remains high and the negative spillover effects from slowing European and global economies materialise, collectively weighing on the Spanish economy.

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