Our "narrative", based on a recovery driven by domestic demand, and private consumption in particular, is being tested. This scenario was not confirmed by actual developments in the first half of 2024. While the fundamentals of a recovery in household purchasing power remain in place, households continue to increase their savings rate to the detriment of consumption.

In the absence of household spending, lacklustre economic activity is keeping a lid on any improvement in productivity and the expected gains in profitability, limiting the prospects for an increase in productive investment. The recovery in domestic demand has been postponed but is expected to come at a more moderate pace than previously anticipated. The emerging scenario continues to benefit from positive carry-over effects in 2024 (+0.5%  at the end of the second quarter), but the pace of the growth trajectory is below potential. 

We are forecasting GDP growth of 0.8% in 2024 and 1.3% in 2025. The disinflation process is expected to continue, with inflation below the ECB target in 2025 (1.9%, after 2.3% in 2024).