Despite the real economy expanding marginally in the final quarter of 2022, the expenditure breakdown suggests that the economy endured significant struggles. Real GDP at end-2022 remained 1.1 % below its pre-pandemic level during the final quarter of 2019. While S&P Global Market Insights has removed the prospect of Spain facing a shallow recession over the fourth quarter of 2022 and first quarter of 2023, the expenditure breakdown in the fourth quarter of 2022 was dire. Market Intelligence analysts expect weak activity to spill into early 2023, resulting from the adverse implications of still high inflation, rising borrowing costs and lacklustre demand across key export markets. The economy will likely endure a modest contraction in the first quarter. Households face a continued squeeze on their real wage and disposable income into early 2023.
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