Mirror, mirror, what does the market hold for us in the coming months?

If yours truly were a mathematician, one of my claims would be to axiomatize the climate factor as a fundamental element in the future of financial markets. Don’t we go out more when the good weather arrives? Doesn’t half of Europe come on vacation or have a residence on the sunny Spanish coasts?

The arrival of good weather, together with an electoral process that always leaves a false feeling of euphoria and everything-going-good will reinforce consumer confidenceso burdened in recent months based on increases in rates, fuel prices, food, etc.

To the reigning start of the good weather, we must add an unexpected turn in the rise in prices experienced in recent months: the decline in the price of a barrel even surprises us every time we go to refuel, with the price of a barrel standing at 75 dollars. brent. While, some analysts speculate on a possible fall to 50 dollars per barrel; something that has not been seen for more than 10 years. Another factor that fosters a favorable environment for consumers is the exchange rate: the price of the euro against the dollar has appreciated in recent months, which favors the old continent when buying crude oil in international markets.

The European Central Bank also helps, and not hearing news about further increases feeds the market. With rates right now at 3.75 (experiencing the smallest rise of this cycle; 0.25%) ECB economists believe they are close to achieving their medium-term target of 2% inflation thanks to the drop in energy prices. In fact, a price rise of 5.3% is now projected for 2023 (compared to 6.3% last December), 2.9% for 2024 (compared to 3.4%) and 2.1 % in 2025 (before, 2.3%).

Tourism. Another chapter is the recovery of tourism with respect to the pre-pandemic. In absolute terms, we are still far from the figures registered in 2019, but the prospects they are very optimistic. In the first three months of 2023, Spain received the visit of 13.7 million international tourists, 41.2% more than in the same period of 2022. Between January and March, the total expenditure of this tourism was €17,201 million, which represents an increase of 44.7% compared to the same period in 2022, according to INE data. And to all this tourism, add the figures for domestic tourism, which since the pandemic has become the engine of our tourism sector.

Read Also:  Advertisers predict big impact of AI on retail media

This inevitably leads us to a month of June that will be excellent for consumption and especially to a summer where tourism will benefit extraordinarily from greater global and daily spending. But you don’t have to give up. The rise in GDP will lose strength from the summer, which is when the contractive impact of monetary policy and financial tensions will become more forcefully visible. This explains why GDP growth forecast for the year as a whole shows contrasts in its time profile: after the rebound in the first two quarters, a slowdown is expected in the rest of the year as the credit crunch – a process that is already beginning to be felt – cools demand. This slowdown will carry over to 2024, prompting a cut in the growth forecast for that year to 1.4% (four tenths less than in January). Investment will continue to be the main driver of activity, especially in its aspect of capital goods and products of intellectual activity. However, public consumption will slow down in line with the foreseeable turn in fiscal policy. Private consumption, for its part, will rise moderately, in line with the rise in household disposable income in real terms that is expected thanks to the drop in inflation. The foreign sector, for its part, will continue to contribute growth thanks to the competitive positioning of Spanish companies. In summary: let’s keep rowing.

Recent Articles

Related News

Leave A Reply

Please enter your comment!
Please enter your name here