Page 15 - Economic report 2020

Accumulated savings, the dynamic The inflationary process and consequent rise
labour market and international in interest rates around the world resulted in
trade sustained the economy. a slowdown in economic activity in 2022. The
falling purchasing power of wages, caused
by inflation, together with more expensive
credit due to the contractionary monetary policies, slowed growth in household consumption
and business investment. But the dynamic labour market and accumulated household savings,
especially those with medium and high incomes, in the years of the pandemic (2020 and 2021),
partly offset the impact of inflation and kept growth in internal demand positive. To this was
added the good performance of the global trade in goods (+5.2%) and the recovery in tourism
flows, which especially benefited economies with a major bias in the tourism sector, such as the
Spanish economy.

One of the factors explaining why the economy resisted the onslaught of inflationary pressures
better than expected in 2002 are the economic policy measures adopted to combat the effects
of the pandemic that were still in place, combined with the aid approved by countries to offset the
impact of surging inflation. Within Europe, the European Commission extended the temporary
easing of the EU Stability and Growth Pact fiscal rules in 2022, allowing members states to
take on debt without restrictions. Moreover, the European Commission authorised the first
packages of NextGenerationEU funds for member states, containing 806,900 million euros for
1
the 2021-2027 period and representing the first European fiscal instrument financed by joint
European debt. The aim of these funds is to stimulate environmental sustainability, promote the
digital transformation and mitigate the economic and social impact of the pandemic. Added to
these European-based measures are those
that were introduced by members states Measures to combat the effects of the 13
which focus on reducing the effect of rising Covid-19 pandemic and inflation
energy costs on households and businesses
(tax breaks, transport discounts and direct aid contributed to economic recovery in 2022.
to the most affected groups, among others).
All these initiatives have played in favour of
economic growth but also detracted from the GLOBAL GDP GROWTH
anti-inflationary goal of monetary policy. Annual variation rates at constant prices, in % Chart 1.1

Growth in the world economy in 2022 was
uneven by regions. So, advanced economies
saw more moderate GDP growth (+2.7%) than
in emerging and developing countries (+4.0%).
In the latter group, note the major slowdown
in activity in China (from +8.4% in 2021 to
+3.0% in 2022), mainly due to the zero-Covid
policy and problems linked to the real estate
sector, as well as the significant moderation in
growth in emerging countries of Europe due Emerging and developing Advanced economies
to the impact of the war in Ukraine (+7.3% in economies External environment of the Andorran economy | I. International economy
2021 and +0.8% in 2022). As for the Middle f: IMF forecasts (July 2023).
East and central Asia, GDP increased 5.4%
in 2022, being the only region to see higher Source: IMF.

1 Total at current prices (€750,000M at 2018 prices). The most important part of this package is the Recovery and Resilience Facility,
with a budget of €723,800M (at current prices). Of the total amount, €338,000M will be non-returnable transfers and €385,800M
will be loans.