Increasing inflation over the last two years has changed the habits of many citizens who are working more, cutting back on savings and taking out more loans to cushion the impact of rising prices. Even so, household consumption is recovering to pre-pandemic levels, according to the Bank of Spain.

In its projections published on Tuesday, the Bank of Spain forecasts that the Spanish economy will grow by 1.9% in 2024, one-tenth of a percentage point below the government’s estimate, and cuts average inflation by six-tenths of a percentage point to 2.7%. On the other hand, it improves its outlook for job creation and a reduction in the unemployment rate, calculating that the latter will fall from 12.1% in 2023 to 11.6% in 2024.

This GDP growth will be driven by four factors: population growth, the gradual revival of the global economy, the deployment of European funds and a lower negative impact of monetary policy. All this is for the future because, in another report, the same Bank of Spain analyses what strategies households are using to adapt their consumption, savings and labour supply decisions to cope with the inflation of the last two years.

More work, less saving and more credit

Spanish citizens are working more, either with a second job or working overtime. They are borrowing more than those in other eurozone countries to adjust to rising prices, especially cash-strapped households.

Specifically, the proportion of people who have resorted to credit in Spain is 2.3 percentage points above the average for the European Economic and Monetary Union (EMU), up to a total of 11% of households, in line with the evolution of consumer credit recently observed in the country.

The study also points out that the percentage of citizens who have to work more to counteract the inflationary scenario represents 16% of Spanish households, 1.2 points above the Eurozone average. Eurostat data show that the proportion of people moonlighting in Spain increased by 6.8% between September 2022 and September 2023, compared with an increase of 1% in the EU.

Recovery in household consumption

Paradoxically, even though 32% of Spanish households claim to have reduced their spending and 9% say they have cut back on the purchase of durable goods, such as cars or household appliances, household consumption has remained on the path of recovery in recent quarters and has reached, by the end of 2023, pre-pandemic records.

In this context, the increase in private consumption will continue to be a fundamental element for the Spanish economy during 2024. Especially when we consider that public consumption, which underpinned the economy’s growth during 2023, representing 20% of potential GDP, according to the Bank of Spain, is not sustainable in the long term if the deficit is to be reduced.

If you want to discover the best option to protect your savings, enter Preciosos 11Onze. We will help you buy at the best price the safe-haven asset par excellence: physical gold.