Specifically, compared with the forecasts published at end-2021, our latest macroeconomic projections published in June expect real GDP growth of 4.1% in 2022 and 2.8% in 2023 (1.3 percentage points (pp) and 1.1 pp, respectively, below the December 2021 projections), while inflation is expected to stand at 7.2% on average in 2022 and at 2.6% on average in 2023 (3.5 pp and 1.4 pp, respectively, above the estimates published in December 2021). The risks to our baseline scenario are tilted to the downside in the case of activity and to the upside in the case of inflation. All against a backdrop of extraordinary uncertainty, linked in particular to the duration and intensity of the war in Ukraine. A greater degree of passthrough of the recent increases in prices and costs to other prices in the economy and to wages is an additional and very significant source of risk. Other sources of risk include the uncertainties surrounding the pace of the effective roll-out of the NGEU programme in Spain and the possible consequences of monetary policy normalisation in terms of the degree of tightening of financial conditions. 2  In any event, in the absence of any fresh shocks or an escalation of the war in Ukraine, these projections would still be consistent with the Spanish economy holding on a gradual recovery path – that could see it reach pre-pandemic GDP levels in the second half of 2023 – and with inflation rates remaining high in the coming months and subsequently moderating gradually thereafter.
24.06.2022  The Spanish banking industry and the economic challenges ahead* Meeting with the Spanish Financial Press Association / Universidad Internacional Menéndez Pelayo Pablo Hernández de Cos Governor *lEnglish translation from the original in Spanish. Good morning: I wish to begin by thanking the Spanish Financial Press Association (APIE) and the Universidad Internacional Menéndez Pelayo for once again inviting me to take part in this meeting, providing me with the opportunity, on this occasion, to address the latest developments in the Spanish banking industry and the challenges ahead. The Russian invasion of Ukraine is a new shock for the world economy, just two years after the shock triggered by the pandemic. The political and economic consequences of the war are difficult to predict, but they are already changing the macro-financial environment, characterised by a sharp increase in uncertainty and a persistent surge in inflation. All this, when the Spanish economy was experiencing a recovery – albeit incomplete and uneven across economic sectors – from the economic effects of the health crisis. The deterioration in the macro-financial environment has come at a time when the Spanish banking industry’s resilience remains generally high and it had returned to prepandemic profitability levels. But the war in Ukraine and, more generally, the economic costs of a high inflationary setting, pose fresh risks for financial stability. Spanish banks have very little direct financial exposure to Russia and Ukraine, but the indirect effects of the war may be significant.