Álvaro Cárcel, Partner.
Before reaching the conclusions, it is interesting to review the forecasts of some key indicators to understand the framework of the game for the next 2024:
1) Economic Growth Spain 2024
a. Forecast: Depending on the source consulted, growth forecasts are between 1.4% and 2%.
b. What it means: It's not high growth, but it's still higher than our European neighbours, and it puts us away from recession.
2) Eurozone Economic Growth 2024
a. Forecast: Again, consulting different sources, growth is expected to be around 0.7% for the Eurozone.
b. What it means: It's poor growth, and bad news for our economy that will have adverse effects.
3) Interest Rates
a. Forecast: Everything points to the fact that we have reached highs after strong rises to contain runaway inflation, and it is expected that they will still remain at these levels for a few months until the second half of 2024, when they will begin to fall gradually.
b. What it means: This is good news, but the effects of rising rates usually have their greatest impact after 1-2 years, so the fallout from the sharp hikes in 2023 will have a negative impact in 2024.
4) Inflation
a. Forecast: Inflation remains high, but in the process of regularizing. It is expected to stand at about 3.5% on average by 2024.
b. What does it mean? Although more moderate, it will still be too high and contribute negatively to growth.
In view of the above data, what can we expect from the year 2024?
Recently, I attended a presentation by Professor and Doctor of Economic Sciences Francesc Xavier Mena, who defined 2024 as a "soft landing" and I think it perfectly defines the planned scenario.
In Spain, an economy that, according to the consensus of economists, does not create jobs if it does not grow above 2%, we expect a fairly stable year, probably without much new job creation (except in some sectors), but we do not expect it to be destroyed excessively. With regard to the segment of management profiles, in which we specialise, and which is less linked to the ups and downs of the economy, our forecast is that it will maintain a dynamism similar to that of 2023, without major alterations.
The rise in interest rates is likely to put the brakes on some investment by companies, which will adopt more conservative stances, with the aim of protecting cash (and hopefully jobs as well).
In short, after 2 years of strong or moderate growth (2022: 5.8%; 2023: 2.3%), the context for 2024 is one of some slowdown and cooling of the economy, but the good news is that the noise of recession is receding.