The Independent Authority for Fiscal Responsibility (AIReF) endorses the macroeconomic scenario that accompanies the 2023 General State Budget (GSB), considering that both the GDP growth path and the inflation forecasts are feasible, although there are significant downside risks in the former.
The purpose of this report is to verify that the budgetary scenario is based on realistic macroeconomic forecasts. For this purpose, the relevant variables are not only real growth, its composition or employment, but also variables expressed in nominal terms. In particular, tax revenues are correlated with the evolution of different components of GDP in current terms with an elasticity that in the last two years is well above the historical average. In addition, some spending items, such as pensions, are indexed to inflation.
The Government’s scenario forecasts real GDP growth of 4.4% in 2022 and 2.1% in 2023, compared with 1.5% forecast by AIReF for next year. In the area of prices, the Government forecasts a slight reduction in the GDP deflator in 2023 to 3.8%, compared with the 4% expected for 2022, in a scenario of a sharp deceleration of the private consumption deflator. AIReF, for its part, estimates a GDP deflator of 4.3% in 2023.