Page 20 - Economic report 2020

a negative impact on risk asset prices. Now, in the last months of 2022, thanks to the better
behaviour of inflation, the pace of interest rate rises slowed and this resulted in a recovery in
the main stock market indexes. Over the year as a whole, the US Dow Jones lost 10.7% and the
European Euro Stoxx 12.4%.

2. Prospects

2023 will be a year of weak economic growth on a global scale due to the economic disturbances
in 2022, which largely continue within a context of major geopolitical uncertainty. Despite the
fall in general inflation, toughening financial conditions will help to slow demand and moderate
economic growth will be seen, well below its potential. However, forecasts do not indicate that
the larger developed economies might enter recession, except Germany (-0.3% in 2023, according
to the IMF).

GDP growth in the USA continued to slow down The US economy slows down but
in the first quarter of 2023 due to the significant consumption is still strong.
interest rate rises, with quarterly growth of
0.5%, compared with 0.6% in the previous
quarter. However, the moderation in growth can mainly be explained by contraction in the variation
in stocks and a slowdown in non-residential investment, only partly offset by acceleration in private
consumption and exports and a smaller decline in residential investment. These data reflect that
the US economy is still showing resilience, thanks to the strength of the labour market, which has
boosted wages and consumption. Despite the economic slowdown, the OECD predicts that the
US economy will grow 1.6% in 2023 and 1.0% in 2024, that average inflation will fall to 3.9% in
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2023, and that the unemployment rate will reach 3.7%, only one tenth more than in 2022, when
it reached a historic low. Finally, the public deficit is expected to increase almost one percentage
point to 5.1% of GDP.

In the Eurozone, the data show that the economy stagnated in the first quarter, after seeing a slight
contraction of 0.1% in the fourth quarter of 2022, and has therefore avoided a technical recession.
However, the performance varies according to
The European economy avoids a country. Among those with growth are notably
External environment of the Andorran economy | I. International economy
technical recession in the first quarter. Spain (+0.5%), Italy (+0.6%) and especially
Portugal (+1.6%), while France progressed
0.1%. In contrast, the German economy shrank
0.1%. The results of the first quarter can be explained by the negative contribution from internal
demand, which was only partially offset by the positive contribution from the foreign balance.
However, this negative GDP growth contrasts with employment growth, which has been 0.6%
since the fourth quarter of 2022.

The forecasts by the three most important international bodies (OECD, IMF and European
Commission) point to an increase in GDP of around 1% for the whole of 2023 and around 1.5%
in 2024. General inflation, for its part, will decline due to falling energy prices, but underlying
inflation could remain higher than estimates, depending on how wages evolve. This is how the
OECD forecasts project it, indicating general inflation in the Eurozone of 5.8% in 2023 and
3.2% in 2024.

In summary, the world has again suffered a profound and transformative shock from the war
between Ukraine and Russia, just when we were recovering from the global economic collapse
caused by the pandemic. In general terms, inflation will continue to influence economic trends
but with a tendency to moderate its impact as it decreases. The main risks to economic prospects