Spain’s earlier prediction of 7% GDP growth has now been lowered to 4.3%. After inflation hit 10% in June, experts now fear it will only increase further as the Ukraine conflict continues to unfold and apply downward pressure on GDP expectations.
The Spanish government’s next move is to raise temporary taxes on energy for companies and banks, and to help provide some relief for its people from rising energy costs and inflation. In addition, the government plans to implement free multiple-trip tickets for its citizens.
Although Portugal’s economy expanded during the first quarter of 2022, the second quarter was more uncertain owing to rising inflation rates across Europe. Prices for energy and fuel have been increasing since the beginning of the Ukraine conflict and are affecting a European economy already weakened by the global pandemic. Portugal’s inflation rate is currently at 8.73% while consumer prices increased by 0.8% in June. GDP growth is expected to reach 6.3% this year, with the worst-case scenario being a mere 4.8%, leading to 0% growth in 2023.
The consequences of the Ukraine conflict are still to be seen in full, forcing Europe’s leaders to act together in an attempt to avoid even higher inflation rates.
Market activity in Spain and Portugal is now slowing because of the upcoming holidays and the closure of many recycling plants over the summer period. At the beginning of July, most steel mills took in less material owing to rapidly falling prices which had a major impact on the market. Meanwhile, copper demand from refineries is stable.
Supply chain difficulties and low demand from the automotive industry are still greatly affecting the European economy. Decreasing metal demand from China is influencing price developments for brass and aluminium scrap in particular.