Page 27 - Economic report 2020

Private consumption and investment the previous year. So, household consumption
grow at high rates. grew 4.5% in 2022 and, despite being lower
than GDP growth (+5.5%), the importance of
this component (representing 56% of GDP)
meant that its contribution to GDP growth was 2.4 percentage points (practically half of the
growth in the Spanish economy that year). In contrast, the trend in consumption by the public
authorities was negative in 2022 (-0.7%), due to the major increase in public spending in the
pandemic years, much of which has been reversed. Nevertheless, important measures were
adopted in 2022 to offset the impact of rising energy and food prices on the most affected
groups, for example the subsidy of €0.2/litre on fuel; the VAT reduction on the electricity bill, and
direct aid to the most affected sectors. Moreover, a new line of credit was established, of 10,000
million euros (0.6% of GDP) for vulnerable businesses.

Investment also saw a very positive trend in 2022, with growth of 3.5%, although this was lower
than the 5.9% recorded in the previous year. This dynamic is a clear sign of economic confidence
and reflects the revival of a large number of the investment projects that were halted during
the pandemic. Moreover, implementation of the NextGenerationEU funds represented additional
resources, although the multiplier effect on private investment this year was still low.

The labour market provided a positive surprise The unemployment rate fell to 12.9%,
with an upward trend that enabled a record the lowest since 2008.
number of registrations with the Social Security
office, spurred on by implementation of the
new labour reform. This legal framework led to a reduction of the temporary employment rate by
7 points in its first year, to a historic low of 17.9% by the end of 2022, a percentage that is close 25
to the European average.

The number of full-time equivalent jobs grew 3.8% in 2022, but with a trend that was clearly
more positive in the first half than in the second. This increase in employment led to a reduction in
the unemployment rate from 14.8% in 2021 to 12.9% in 2022, the lowest since 2008, just before the
outbreak of the financial crisis.

In 2022, wages per employee increased 2% in nominal terms (-4.5% in real terms), while
productivity rose 1.6%. Accordingly, the real unit labour costs (ULC) grew 0.4%, meaning that the
foreign competitiveness of Spanish companies worsened slightly.

Inflation in July reaches the UNEMPLOYMENT RATE IN SPAIN
highest rate in decades. As % of active population Chart 3.2

2022 was marked by the most significant
inflationary process of the last four decades,
due to rising energy and food prices, a process
that began in 2021 with the post-pandemic External environment of the Andorran economy | III. Spanish economy
recovery and was aggravated by the outbreak
of the war between Ukraine and Russia in
February 2022. After hitting a high of 10.8% in
July, general inflation began to moderate in the
second part of the year until it reached 5.7% in
December, as gas and oil prices fell, and partly f: European Commission forecasts (May 2023).
thanks to implementation of the gas price cap Source: Eurostat.
on the Iberian peninsula, approved by Brussels