Pablo Hernández de Cos: Financial stability-related risks and vulnerabilities and situation of the Spanish banking system

Speech by Mr Pablo Hernández de Cos, Governor of the Bank of Spain, at the elEconomista 6th Banking Forum, Madrid, 1 December 2023. 

Central bank speech  | 
01 December 2023

I would like to begin by thanking elEconomista for inviting me to take part in this Banking Forum, allowing me to share with you the Banco de España's most recent analysis of our country's main financial stability-related risks and vulnerabilities, and of where the banking sector currently stands. To put this analysis in context, I will begin by briefly taking stock of recent developments in the Spanish economy and its future prospects.

1 Recent developments in the Spanish economy

Following strong momentum in the opening months of the year, the Spanish economy began showing signs of a slowdown in Q2, which carried through to the summer months. GDP growth stood at 0.6% and 0.4% in the first two quarters of the year, followed (according to the early estimate) by 0.3% in Q3, in line with the Banco de España's latest projections published in September.

These projections forecast average growth of around 2.3% in 2023, while the outlook for the following two years suggests that momentum will slow somewhat (1.8% in 2024 and 2% in 2025).

Although these projections will be updated in December, the most recent forecasts drawn up by certain international organisations (the European Commission and the IMF) indicate a similar pattern, whereas those released by the OECD anticipate lower GDP growth in 2024 (1.4%).

Meanwhile, improvements on the supply side of energy markets since 2022 H2 and the effects of monetary policy tightening have done much to keep inflation in check. Thus, following upturns in previous months, inflation fell to 3.2% in November, while underlying inflation continued trending downwards.