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ECONOMY

Spain cuts 2022 growth forecast over war in Ukraine

Spain on Friday slashed its economic growth forecast for 2022, mainly due to the fallout of Russia's invasion of Ukraine which has fuelled inflation and hurt consumer demand.

Spain cuts 2022 growth forecast over war in Ukraine
Spain's economy slowed down considerably in the first months of 2022. (Photo by Pau BARRENA / AFP)

The gross domestic product of the eurozone’s fourth-largest economy is now expected to expand by 4.3 percent rather than the 7.0 percent previously forecast, the economy ministry said.

“The aggression against Ukraine is having important economic and social effects, which are affecting all European countries,” Economy Minister Nadia Calviño told a news conference.

Madrid had previously hoped for a firm recovery for 2022, reasoning that the impact of the coronavirus pandemic would begin to ease.

But Russia’s invasion of Ukraine has further exacerbated supply chain woes and pushed up prices of daily necessities, especially energy.

Spain’s economy expanded 0.3 percent in the first quarter of 2022, slowing from 2.2 percent in the previous three months, national statistics institute INE said earlier on Friday.

The country’s tourism-dependent economy expanded by 5.1 percent last year after plunging by 10.8 percent in 2020 due to the pandemic, one of the worst results among industrialised countries.

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MONEY

One in three Spaniards can’t afford to go on holiday this summer: study

One third of Spaniards can't afford to pay for a holiday this summer and almost half the population is having trouble making ends meet, according to new data from Spain's national stats agency.

One in three Spaniards can't afford to go on holiday this summer: study

Data from Spain’s national statistics body, the Instituto Nacional de Estadística (INE), has revealed that one in three Spaniards cannot afford to take a week’s holiday.

The 2021 Living Conditions Survey, published this week, also concluded that over one in four Spaniards (27.8 percent) were at risk of poverty or social exclusion, a figure which represents an increase of 1.6 percent on the 2019 study.

The INE considers someone at risk of poverty if their income level is below the the national average; that they are suffering “severe material and social deprivation”; or that their household is classified as “low intensity in employment.”

There are 13.2 million people who meet at least one of these criteria in Spain.

The study, which the INE publishes once a year, is the most detailed reference for measuring poverty at the national level, and the numbers also reveal that there are 10.3 million people in Spain with incomes below the poverty line.

In 2020, that threshold was €9,535 per annum for a single-person household and €20,024 for a household of two adults and two children.

Furthermore, there are another 4 million Spaniards facing “severe material deprivation,” which is defined as people who cannot afford expenses such as going on holiday for at least one week a year (32.7 percent of Spaniards), eating meat or fish every two days (4.7 percent), having the financial capability to deal with unforeseen events (33.4 percent) or maintaining a comfortable temperature at home (14.3 percent), something particularly important during the summer months in Spain but made much more difficult by increasing electricity prices.

READ ALSO: How much does it cost to have air conditioning at home in Spain?

North-South divide

Many countries have a famous North-South divide – Italy, England, and the United States, to name just three. Spain can be included on this list, and this is especially true when delving into the INE data.

According to the study, economically speaking Spain is increasingly divided into horizontal halves: in southern Spain poverty levels even double those in the north.

A third of people living in Andalusia and Extremadura are at risk of poverty, for example.

In the Canaries, Murcia, Castilla-La Mancha, and Valencia, the figure is one in four.

Contrast that, however, with the data from northern Spain: only one in ten people in Navarra and Basque Country are at risk of poverty; in Madrid (admittedly central Spain but it is the capital) and Catalonia, the figure is slightly higher but still only around 15 percent.

Inflation

The economic hardship comes amid not only Spain’s recovery from the pandemic, but also the double shock of skyrocketing inflation, which reached a 37 year high this week, and crippling energy bills caused by knock-on effects from war in Ukraine.

A loss of earnings during Covid-19 lockdown, combined with Spaniards feeling the pinch of inflation in their shopping baskets and rapidly increasing energy bills, means that more Spaniards are being pushed into poverty and the gap between the rich and poor in Spanish society is widening.

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