MacroInsights #07

Macro outlook, global focus and micro perspective for May 2024.

Macro outlook

The RealTimeTracker, our real-time monitoring and forecasting model, estimates that quarterly GDP growth could reach +0.5% in Q2 2024. Annual growth would stand at 2.3%, two tenths lower than in 2023 but triple the figure projected for the Eurozone. All of this is conditioned by an unstable political environment both nationally and at European level:

– The European Parliament elections and the subsequent negotiations will produce a more fragmented environment, with potential consequences for decarbonisation, industrial, migration, defence or security policies.

– Monetary policy decisions: the ECB is most likely to start its rate-cutting cycle in June, but whether it will continue in July and September is unclear.

Global focus

Digitalisation will play a central role in the need to align industrial and competitive momentum with strategic autonomy in the EU, with six priority fronts:

1. Connectivity infrastructure with a focus on 5G.
2. Critical raw materials both in energy-intensive industries (high dependence on fossil energy, aluminium, steel, lithium, cobalt) and in green technology (high dependence on minerals needed for electronic components: lithium, cobalt, nickel, copper, chromium, molybdenum).
3. Semiconductors, where the EU does not lead in any stage of the value chain (the US dominates the high value-added stages, Asia dominates production).
4. Consolidation of a single data market.
5. Digital transformation of industrial companies.
6. Increasing digital skills within companies.

These 6 fronts are structured around 16 specific KPIs that will measure progress in digitalisation country by country and across the EU as a whole.

Micro perspective

To make the most of this digitalisation drive, Spanish companies should especially consider three keys in light of the data:

· Focus on more sophisticated technologies and tools, where they lag furthest behind, rather than on basic and intermediate skills.

· Better identify their technological dependencies and devote more resources to diversifying and securing supply sources of critical inputs.

· Leverage growth, since digitalisation multiplies the economies of scale of business growth.