The development of economic growth remains positive in 2023 and the fundamental element remains inflation, “the undisputed driver of uncertainty”. These are some of the conclusions of the Quarterly Economic Situation Bulletin, which presents the results analyzed in the second quarter of the year in a report prepared by the economists of the College of Aragon.
In summary, the document states: Contrary to original expectations, economic growth has moved from more to less. So the GDP revisions increased the numbers for 2022, with an impact on the first half of 2023 and the flatter behavior was carried over to the second half and first quarters of 2024. On the other hand, the path of the weakening of inflation, conditioned by the weakening of energy prices, is reversed by the maintenance of basic inflation, especially food prices. Ongoing inflation raises concerns about the continuation of tight monetary policy measures whose consequences for economic activity are already apparent.
The Bulletin notes that economic activity continues the slowdown trend. Until the first half of the year, Aragon’s year-on-year GDP growth remains below the national average, reaching 1.3% and 1.8%, respectively, in the second quarter, according to the latest estimates from AIREF and INE. The weakening trend is likely to continue in the second half of 2023, but a recession is not expected.
As far as the labor market is concerned, Employment, as measured by the labor force, has been above pre-pandemic levels since the first quarter of the year.. However, the annual growth rate is below the national average. The latest membership data shows more stable and similar performance in the two territories in the third quarter.
Inflation, for its part, remains at high levels and is beginning to accelerate again. The energy crisis that caused the slowdown in the first half of the year is offset by persistent underlying inflation and, in particular, food prices, which remain above 10% per year.
The Aragonese industry continues to show very volatile behavior. With a more positive first quarter than the second, July once again showed good development. In any case, The Aragonese industry is developing more strongly than that of the country as a whole. The biggest differences exist in the production of energy and intermediate goods.
The foreign sector is growing
Cumulative exports continue to increase, but at a slower pace. The slowdown is characterized by inflation and the global economic slowdown. The growth of Aragonese sales abroad is less dynamic than that of Spanish sales. Also Aragon distances itself from the national development of imports which recorded a sharp increase and thus a lower coverage ratio.