In the first quarter of 2022 GDP grew by 0.8% quarter-on-quarter, with all demand components contributing to the expansion. Private consumption growth was supported by favourable labour market conditions and the sharp increase in wages in the private sector in the beginning of the year. Consumer confidence has deteriorated starting in March 2022, suggesting lower private consumption growth for the rest of the year. Export of goods and services are forecast to expand in 2022, due to both goods exports and tourism. The implementation of the Recovery and Resilience Plan is set to be the main factor behind the accelerated investment growth in both 2022 and 2023.
Last update : Summer 2022 Economic Forecast (14/07/2022)
|GDP growth (%, yoy)||-4,4||4,2||2,8||2,3|
|Inflation (%, yoy)||1,2||2,8||12,5||6,8|
Overall, real GDP is expected to grow by 2.8% in 2022 and 2.3% in 2023. Compared to the Spring Forecast, the real GDP growth rate is 0.7 pps. higher in 2022 and 0.8 pps. lower in 2023. The upward revision in 2022 reflects mainly the strong recovery in the first quarter of this year. The weaker external environment and tighter lending conditions, combined with the weaker real wage growth, explain the downward revision for 2023. The strong wage increase in 2022 is set to lead to further price in-creases, particularly in the non-tradeable sector. In the context of less buoyant lending activity and adjusted inflation expectations, more moderate wage increases are forecast for 2023, leading to slower consumption growth.
HICP inflation is set to accelerate to 12.5% in 2022 on the back of higher energy and food prices and indirect effects of increased energy prices for firms to overall inflation. In 2023, HICP inflation is expected to settle at 6.8%. High food and services prices are set to sustain relatively high overall inflation reflecting the assumed developments in food commodity futures and the impact of past wage increases, respectively.