The Spanish economy in the first year of the Ukrainian war
In this new version of the Observatory, The Observatory's researchers, José E. Boscá, Rafael Doménech, Javier Ferri, Vicente Pallardó y Camilo Ulloa present the explanatory factors of the business cycle in the first year of the Ukrainian war, using the information available up to the end of the year. fourth quarter 2022, provided by the INE.
They use a decomposition of shocks based on the EREMS macroeconomic model (see Boscá et al. 2020a). In this way, it is possible to analyse and make a preliminary assessment of the factors that have contributed to the stabilisation of the economy after the COVID-19 crisis, Given that the emergence from the crisis coincided with a environment of sharp changes in the relative prices of goods versus services, major monetary and fiscal stimuli and disruptions in global production chains. In addition to this, since the middle of the first quarter of 2022, the following new measures have been added the war in UkraineThe cost of raw materials, especially energy products, rose, accelerating price growth at rates not seen for decades.
GDP growth per person of working age
In particular, this Observatory identifies the origin of the shocks and the intensity and persistence with which they are affecting a set of macroeconomic aggregates that have been the focus of attention in a period in which inflation measured on the basis of the general Consumer Price Index (CPI) has returned to levels not seen in the last four decades. In particular, analyses the supply, demand and credit factors underlying the evolution of GDP per working-age population, domestic output inflation, as measured by the GDP deflator, and real wage growth. This type of analysis provides valuable information for policy action, as its optimal response cannot be independent of the nature of the shocks affecting relevant issues.
The labour market: unemployment and vacancies
The previous observatory (Boscá, et al., 2022) noted that supply factors had been gaining weight in the recovery of the economic cycle as the year 2021 progressed, while demand factors were losing weight as inflation and uncertainty increased. In the final two quarters of 2022, it is confirmed that supply shocks are primarily responsible for the year-on-year GDP growth rates, while demand and credit factors have shifted to a negative contribution.
As a key aspect for the correct interpretation of the results, it should be noted that, since the variables are measured in terms of year-on-year growth rates, the observation of the series corresponding to a period includes the effect on the cumulative sum of quarter-on-quarter growth rates in the four quarters prior to that period.
The Spanish economy in the international context: the business environment
As in the previous edition of the Observatory, this year's Observatory has once again presented a economic indicator, in this case the Business Environment Indicator, to compare the evolution of Spain's performance. against a group of eight European Union countries (EU8) that set a benchmark at the frontier of economic and social development in our economic environment.