MacroEconomic Bulletin - Second half of April



The US GDP maintained a moderate growth in the first quarter. According to U.S Bureau of Economic Analysis, its GDP increased at an annual rate of +1.1% in the first quarter of 2023 (Flash Estimate). The US GDP managed to maintain a moderate growth despite the complex scenario about inflation and interest rates. This result is in line with the Fed's estimates to maintain a moderate but positive growth of the economy in 2023, at around +0.6%. Its increase reflected improvements in consumer spending, exports, and federal government spending, which were partly offset by decreases in private inventory investment and residential fixed investment. Likewise, we highlight the increase in imports, which are a subtraction in the calculation of GDP,  reflecting an increase in goods (mainly durable consumer goods and automotive vehicles, engines, and parts).

The euro zone economy returns to growth, albeit at a slower pace than expected. The eurozone economy grew by +0.1% qoq (+1.4% yoy; Flash Estimate) in the first quarter, although this fell slightly below Consensus expectations (+0.2% qoq and +1.4% yoy). Looking ahead to the European Central Bank's next meeting, the reading on macroeconomic data for its major economies is ambiguous. On the growth side, while France and Germany stagnated, Spain and Italy (+0.5% qoq and +1.8% yoy) presented solid expansion, albeit supported by the good performance of the external sector. On the inflation side, there were slight upturns, although largely due to the statistical effect, and inflation remained elevated in a large part of the eurozone. However, with the already noted slowdown in domestic demand and following the tensions observed in the financial system, we expect an easing of the hikes to 25 basis points.

China's GDP rebounds in the first quarter of the year marked by the cessation of its zero-covid policy. China's GDP surprised on the upside, growing a +4.5% yoy (+2.2% qoq; Flash estimate) in the first quarter of 2023. This expansion resulted from a strong growth in exports and infrastructure investment, as well as a rebound in retail trade. Nevertheless, China's National Bureau of Statistics highlights the still weak domestic demand and the high uncertainty of the international context, calling for moderation on the implications of this rebound. While analysts have already begun to revise their forecasts for this year, now above the Chinese government's target of +5.5%, at around +6.6%. As such, albeit this figure points to a more favorable outlook for this year, we stress the need to continue to follow the evolution of consumption and the real estate market, key factors in consolidating the recovery beyond government investment and the rebound in leisure consumption, previously more constrained by restrictions.


The Spanish economy continued to expand in the first quarter of the year (Flash estimate), growing by +0.5% quarter-on-quarter (+3.8% yoy), in line with our expectations. In quarter-on-quarter terms, growth is explained by the positive contribution of foreign demand, while domestic demand contracted (-0.8%). As for domestic demand, its contraction was driven by consumption, while investment maintained a positive contribution. In year-on-year terms, the contribution of all components was positive, both on the demand and supply sides. Therefore, the Spanish economy continues to evolve favorably, albeit we continue to observe a slowdown in consumption, this is occurring at a slower pace than expected and still remains at levels above those of a year earlier. In addition, at EthiFinance Ratings we have revised our 2023 growth forecast to +1.6% (+1.3% previously estimated).

Furthermore, inflation in April rebounded slightly to +4.1% yoy (+3.3% in March), due to the statistical effect, as April 2022 prices moderated slightly. This upturn is explained by a lower downward effect of fuel and energy prices, while for the first time in recent months food has a negative influence. We also highlight the drop in core inflation, although it remains elevated at +6.6% yoy (+7.5% in February). On the other hand, in March, industrial goods prices decreased (-1% yoy), mainly due to the effect of energy, which presented a negative variation of -15.9%. Likewise, the Index also presented a month-on-month fall (-2.2%). Furthermore, other contributors to the decline were intermediate goods, in particular chemicals, and non-durable consumer goods, especially oils, both of which were affected by the outbreak of the war.

Regarding the labor market, the Labor Force Survey (LFS) indicates a moderation of its favorable evolution in the first quarter of 2023. Thus, the LFS reports an increase in the number of unemployed (103,800 people) and a fall in employment (11,100 people), increasing the unemployment rate to 13.26% of the active population (12.87% in 4Q2022 and 13,65% in 1T2022). Nevertheless, we highlight the usual pattern of job destruction in the first quarter, marked by the end of the Christmas campaign, with this quarter presenting the smallest drop since the financial crisis of 2008. As for temporary employment, the reduction in the number of employees was concentrated in those with temporary contracts, while those with permanent contracts continued to increase, reducing the temporary employment rate once again to 17.28%.


The French economy maintained a moderate growth in the first quarter of 2023 (Flash estimate), presenting a +0.2% quarter-on-quarter (+0.8% yoy). At the moment, the observed data is in line with the forecasts by the Banque de France for 2023 (+0.6% yoy). On a quarterly basis, domestic demand again contributed negatively to GDP growth, albeit to a lesser extent (-0.1 points after -0.4 in 4Q2022). In addition, the stability of household consumption improved (0.0% after -1.0%), while gross fixed capital formation (GFCF) decreased slightly (-0.2% after 0.0%). Conversely, external demand contributed positively to GDP growth (+0.6 points after +0.2). Finally, despite the fact that the French economy is growing at a moderate level, the domestic demand is contributing negatively to GDP in the last two months.

Regarding the CPI (Flash estimate) for April 2023, the INSEE published an annual increase of +5.9%. The French economy therefore shows a high inflation rate, which is higher than the one recorded last month (+5.7%). In year-on-year terms, the price of energy accelerated again (+7% yoy after +4.9% yoy in March 2023), along with the price of services and tobacco. On the contrary, food prices slow down, with a large deceleration of fresh products. However, month-over-month, consumer prices should increase by +0.6% in April 2023 (after +0.9% in March 2023), showing a more favorable trend than year-over-year, due to the fact that energy prices would slightly decrease due to the decrease in gas and petroleum products prices. Food prices would decelerate and, on the contrary, services prices would accelerate due to the rebound in transport services prices.

Finally, regarding the business climate index, the INSEE has published that the index has faltered a little in April for the second consecutive month, down to 101.9 points compared to March 2023. This reflects a negative trend that, despite remaining slightly above its long-term average of 100, is more linked to a slower and more moderate growth path of the economy. Regarding the sectors affected, the service sector and manufacturing industry worsened, being the main cause of the decrease in the business climate index, however the building construction sector has remained constant and retail trade has improved slightly. More specifically, the deterioration of the service sector driven by the worsening expectations in the forecast balance on activity, demand and job expectations. Concerning the manufacturing industry, it is getting closer to its long-term average (100), the indicators that have caused this decline are the worse expectations for production and overall order books.


The Statistisches Bundesamt (Destatis) has published its GDP (Flash estimate) for the German economy in the first quarter of 2023, growing by +0.2% yoy. However, on a quarter-on-quarter, GDP stagnates according to estimates (0.0% qoq), showing a not very positive trend for the economy, in fact the German government revised its forecast for economic growth at around +0.2% in 2023 as a whole. The final consumption expenditure of both households and government declined at the beginning of 2023. Nevertheless, positive contributions, in contrast, came from capital formation and exports.

German unemployment rose more than expected in April. The seasonally adjusted number of persons in employment increased by +0.1% mom in February 2023 and +1.0% compared to the same month a year earlier. Likewise, according to results of the labor force survey, the unemployment rate stood at 2.9% of the labor force. Therefore, we can observe a stable employment growth in the German economy in spite of the economic context, in fact, in the words of the German Minister of Labor: "Nevertheless, we have a stable labor market in a difficult economic environment.".

On the other hand, the annual inflation rate (CPI) stands at +7.2% (Flash estimate) for the German economy. The inflation rate thus declined once again in April 2023 (March 2023: +7.4% yoy and February 2023: +8.7% yoy). Energy and food prices have had a substantial impact on the inflation rate since the beginning of the war in Ukraine. In April 2023, food prices continued to record above-average growth (+17.2% yoy). The year-on-year increase in energy prices (+6.8%) was again lower than the rate of change of the general index although still high, influenced by the base effect, as the level of the index was high in April 2022, due to the conflict between Russia and Ukraine.

Finally, according to the IFO, in April 2023, the German business climate has improved slightly. Looking at the year-on-year development an increase is observed (93.6 April 2023 vs. 91.9 April 2022). This was mainly due to the improvement in the business expectations index (+1.2 points mom), despite the current perception decreased slightly (-0.4 points mom). However, the figure was below market expectations, which had expected an increase to 94 points. Another economic aspect that improved considerably was the Consumer Confidence Index, where GfK set an increase to -30 points in April 2023 (+6 points, mom). Although food and energy prices continue to rise and inflation undermines disposable income, there is a sudden flowering of optimism with big improvements across the board. For example, in terms of monthly change, +8 points regarding the improvement in  expectations for the personal financial situation and +6 points as for the outlook for the economy in general.


The Portuguese economy continues to progress favorably, registering a growth rate of +1.6% qoq (+2.5% yoy; Flash Estimate), driven by exports. Thus, the Portuguese economy continues to advance at a positive pace after last year's +6.7% rebound, although in both year-on-year and quarter-on-quarter terms there is a slowdown in domestic demand, with a slight fall in consumption and investment. Nevertheless, although we expect this slowing trend to continue, Portugal will maintain a steady level of growth, which could be above the European Commission's forecast of +1.0% for 2023.

In addition, inflation declined sharply in April to +5.7% yoy (+7.4% in March; Flash estimate) driven by the slowdown in energy, gas and food products prices. Hence, the CPI was favored by the statistical effect after the large increases experienced last year due to the outbreak of the war. Likewise, core inflation also fell, to +6.6% yoy (+7.0% in March). In this regard, we expect inflation to continue to fall in the coming months, especially as we expect to see some moderation in food prices with the Portuguese government's exemption from VAT on some essential food products.

Finally, expectations indicators continued to improve in April, although they point to a slowdown in consumption. Accordingly, consumer confidence rebonded again in April, although this improvement was due to the outlook for the economic situation of households, while the expectations for major purchases continued to decline. Likewise, the economic climate also points to a more favorable situation than in the previous month, which was generalized in all sectors except manufacturing and commerce, where fewer orders were expected. Thus, although pessimism and uncertainty seem to be beginning to ease after months of improvement in expectations, a slowdown in consumption could be ahead, probably related to the loss of purchasing power after the inflationary period and the tightening of financing conditions.