Demand

In 2023, the price of Brent crude averaged USD 82.5, falling from over USD 100 in 2022, driven by the war between Russia and Ukraine, although its trend over the past year has been somewhat erratic and dominated by a wide array of events.

Inflation peaked in 2022 before easing considerably in 2023 in most economies. For instance, the average inflation rate in the United States dropped from 8.0% in 2022 to around 4.1% in 2023, while in the eurozone it fell from 8.4% to nearly 5.6%.

The Spanish economy delivered a strong performance throughout the first half of 2023, on the back of a gradual recovery in industrial activity within certain regions of Spain, coupled with an increase in exports, particularly of services, with tourism also pulling hard though with little room for further growth.

Industrial production (IP) declined by 0.8% m/m in seasonal and calendar adjusted series, while increasing by 3.1% y/y on calendar adjusted terms. We expect GDP to materialize close to 4.5% in 2023, whereas gradual interest rate hikes on top of relatively supportive fiscal policy could lead 3.5% growth in 2024.