The document summarizes the state of the global economy in the context of uncertainty arising from the Russian invasion of Ukraine. It notes that while recovery was underway in early 2022, the invasion has increased economic uncertainty and risks slowing global GDP growth by over 1 percentage point. Commodity and energy prices have risen sharply due to supply disruptions, posing inflationary pressures worldwide. Central banks are beginning to withdraw pandemic stimulus measures like quantitative easing in response to high inflation.

1. Economy
in times
of uncertainty
A P R I L 2 0 2 2

2. ECONOMY
Global

3. ECONOMY IN TIMES OF UNCERTAINTY
Summary
Global economic situation
In mid-February, just before the Russian invasion of Ukraine, the evolution of the main macroeconomic
variables allowed us to speak of recovery. The remission of the pandemic, vaccination efforts,
expansionary economic policies and favorable financial conditions justified the IMF's January forecast
of overall GDP growth of 4.4% in 2022 and 3.8% in 2023. However, it pointed to the risk of inflationary
pressures fueled by rising energy and other commodity prices in the face of recovering demand
coupled with supply constraints.
The invasion represents a new blow to the global economy and generates a qualitative change in the
geopolitical situation, increasing uncertainty. Although the weight of Russia and Ukraine in the world's
GDP, trade and financial markets is small*, both account for a significant percentage of global exports
of oil, gas, wheat, corn and metals such as palladium and nickel. According to the OECD, the rise in
commodity prices and movements in the financial markets could reduce global GDP growth by over 1
percentage point (pp) in the first year and push up global consumer price inflation by around 2.5 pp.
3.9%
4.4%
world GDP growth forecast by the
IMF in January 2022 ahead of the
Russian invasion of Ukraine
3
GDP growth of advanced economies
forecast by the IMF in January 2022 ahead
of the Russian invasion of Ukraine
* Ukraine and Russia together account for around 2% of global GDP and trade. The stock of FDI received and issued by Russia
accounts for 1-1.5% of the global total, and cross-border bank claims by residents of both countries reported to the BIS
represented less than 0.5% of the global total in Q3 2021.

4. ECONOMY IN TIMES OF UNCERTAINTY
1
2
3
4
The pandemic’s resurgence, uneven distribution of vaccines and
uncertainty about their efficacy in the event of the possible
appearance of new variants
Disruptions in global supply chains resulting from the impact of the
conflict on key raw materials
Inflationary pressures – Sharp increase in energy and raw material
prices. Concern about second-round effects
Withdrawal of monetary and fiscal stimuli adopted to alleviate the
impact of the pandemic in the short/medium term
FACTORS
CONDITIONING
THE STRENGTH OF
GLOBAL ECONOMIC
RECOVERY
Risks to the global economy
5
Economic consequences of the Russian invasion of Ukraine and
sanctions imposed on Russia by Western economies
4

5. ECONOMY IN TIMES OF UNCERTAINTY
Forecasts put in check by Russian invasion of Ukraine
* The OECD forecast in Dec. 2021 global GDP growth of 4.5%, 4.3% in the Eurozone and 3.7% in the US.
Estimates from 2022 onwards.
Source: Círculo de Empresarios based on IMF and OECD, 2022.
The conflict could reduce global GDP
growth by 1.1 pp one year after the start
of the conflict, -1.4 pp in the Eurozone
and -0.9 pp in the US*
5.6
4
2.6
2021 2022 2023
US
5.2
3.9
2.5
2021 2022 2023
Eurozone
6.8
2.4 2.6
2021 2022 2023
Latin America and
Caribbean
4
3.7
4
2021 2022 2023
Sub-Saharan
Africa
4.2 4.3
3.6
2021 2022 2023
Middle East and
Central Asia
7.2 5.9 5.8
2021 2022 2023
Emerging and
developing Asia
5.9
4.4
3.8
2021
2022
2023
World
5
3.9
2.6
2021
2022
2023
Advanced
6.5
4.8
4.7
2021
2022
2023
Emerging
and
developing
5

6. ECONOMY IN TIMES OF UNCERTAINTY
Main causes of inflation
The IMF forecast in Jan. 2022 a moderation of inflation in 2023, after the
2022 spike
Estimates from 2022 onwards.
Source: Círculo de Empresarios based on IMF and OECD, 2022.
1
2
3 Emergence of pent-up demand supported by
expansionary fiscal and monetary policies
Rapid rise in commodity and energy prices, exacerbated
by the conflict
Component shortages and supply chain disruptions
% y-o-y change
Global inflationary pressures aggravated by the war conflict
Inflationary pressures lead to
1
2
Possible alteration of expectations and transfer to wages,
increasing the possibility of an inflationary spiral
The Fed and the ECB have begun to withdraw monetary
stimulus and, in the case of the Fed, to raise benchmark
interest rates
In Mar. 2022,the OECD estimates that one year after the start of the Russian
invasionof Ukraine, global inflation will be 2.5 pp higher than its Dec.2021 forecast
% y-o-y change
3.1
3.9
2.1
5.7 5.9
4.7
2021 2022 2023
Advanced Emerging and developing
2.7
4.4 4.8 4.2
2.0
2.0 1.4 2.5
Eurozone OECD US World
OECD forecast inflation in Dec.21 Impact of the war conflict
6

7. ECONOMY IN TIMES OF UNCERTAINTY
*The Eurozone has not recorded similar levels of inflation in its history (beginning of the historical series in 1997).
Source: Círculo de Empresarios based on OECD and Eurostat, 2022.
% y-o-y change
Inflationary spiral in the OECD and Eurozone
Eurozone inflation* in March 2022, at its highest level since
records began (1997)
% y-o-y change
-1
0
1
2
3
4
5
6
7
8
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
UK US
Eurozone* OECD
Generalized price increases at the OECD level, rates not recorded since
the late 1980s and early 1990s
Eurozone
7.5%
7

8. ECONOMY IN TIMES OF UNCERTAINTY
3.5
7.4
9.1
10.0
14.1
17.0
34.8
42.2
63.4
77.3
88.4
Copper
Zinc
Platinum
Gold
Iron ore
Aluminium
Palladium
Corn
Nickel
Fertilizers*
Wheat
High increases in commodity prices
Increase in prices of main raw materials exported by Russia and
Ukraine
Supply constraints stemming from supply chain disruptions and the Russian invasion of Ukraine coupled with a post-pandemic recovery in demand put
commodity prices under pressure
% change average Price Jan.-Mar. 2022
*Potash.
Global raw material dependence on Russia and Ukraine
% world exports, 2020
1.1
1.4
2.3
3.4
3.8
5.1
12.7
13.8
20.7
23.4
25.1
13.5
3.0
0.1
0.1
9.4
Wheat
Iron
ore
Zinc
Aluminium
Copper
Gold
Platinum
Nickel
Wheat
Fertilizers*
Palladium
Russia Ukraine
Source: Círculo de Empresarios based on OECD, 2022. 8

9. ECONOMY IN TIMES OF UNCERTAINTY
Rising energy prices
Source: Círculo de Empresarios based on Eurostat, Fedea and Investing, 2022.
Oil and gas
The escalation of energy prices that began in mid-2021 has been aggravated by the war conflict, with a particular impact on the EU as Russia is one of its main
energy suppliers. The EU imports 34.8% of its natural gas, 23.1% of its oil and 40.9% of its coal from Russia
% change
European dependence on Russian energy supplies
% total energy requirement (coal, oil and gas), 2019
18.2
33.4
9.4
27.8
151.3
76.5
Oil Brent
Natural gas (TTF)
Coal
% change Jun.21-Feb.22 % change Feb.22-Apr.22
EU-27
16.9%
9

10. ECONOMY IN TIMES OF UNCERTAINTY
Stressed supply chains
Source: Círculo de Empresarios based on New York Federal Reserve and CPB Netherlands Bureau for Economic Policy Analysis, 2022.
-3
-2
-1
0
1
2
3
4
5
Jan-12
Dec-12
Nov-13
Oct-14
Sep-15
Aug-16
Jul-17
Jun-18
May-19
Apr-20
Mar-21
Feb-22
Global US Eurozone
Pressure on supply chains is at record highs
Global Supply Chain Pressure Index. Value = 0 is at its mean. Values +/- indicate
deviation +/- from the mean
100
105
110
115
120
125
130
135
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
World trade World exports
World trade slows in early 2022
Index 2010 = 100
10

11. ECONOMY IN TIMES OF UNCERTAINTY
In the current context of high inflation, the main Central Banks are beginning to reverse the monetary stimuli implemented to alleviate the impact of the Covid-19
pandemic
Monetary policy response
Source: Círculo de Empresarios based on Statista, Fed and ECB, 2022.
Moderate outright purchases of assets that doubled their balance
sheets in the last 2 years
% y-o-y change
Benchmark interest rate hikes begin
%
0
10
20
30
40
50
60
70
80
90
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Fed ECB Fed ECB
Jan. 2020
Mar. 2022
$4.2 tr €4.7 bn
$9 bn €8.7 bn
1.75
0.5
0 0
0.75 0.75
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
Fed ECB Bank of England
11

12. ECONOMY IN TIMES OF UNCERTAINTY
Deteriorating manufacturing PMIs in Europe
The expansion of activity in Europe moderates in the new scenario of global uncertainty
Source: Círculo de Empresarios based on Markit and JP Morgan, 2022. 12

13. ECONOMY IN TIMES OF UNCERTAINTY
Public and private debt, a global problem
Source: Círculo de Empresarios based on IMF, 2022.
Households and firms also increased their leverage ratios
Many economies increased their public debt levels in 2020 in
part due to pandemic-related spending
% GDP
115.1
69.1
155.8
254.1
119.9
104.5
133.9
68
France Germany Italy Japan Spain UK US China
2020
2019
% GDP
294.7
180.5 180.2
221.9
210 209.8
243
France Germany Italy Japan Spain UK US
Private debt 2020 2019 Corporate debt 2020
13

14. ECONOMY IN TIMES OF UNCERTAINTY
China: economic slowdown
Source: Círculo de Empresarios based on Statista, 2022.
After regaining its pre-pandemic level in Feb. 21, the consumer
confidence index has averaged 120 points
Value > 100: more consumers are optimistic than pessimistic
GDP growth will chain 3 quartersof year-on-year moderationuntil Q4 2021.
In 2022, the IMF forecasts year-on-yeargrowth of 4.8%
%
-10.5
11.6
3.4
2.6
0.3
1.3 0.7
1.6
-6.8
3.2
4.9
6.5
18.3
7.9
4.9
4.0
-15
-10
-5
0
5
10
15
20
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
Q2
2021
Q3
2021
Q4
2021
% quarterly change % y-o-y change
126.4
112.6
127
117.5
121.5
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Retail sales of consumer goods and industrial production have slowed
over the past year
33.8
34.2
6.7
35.1
14.1 7.5
Jan-Feb
21
Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-Feb
22
Retail sales Industrial production
% y-o-y change
14

15. ECONOMY IN TIMES OF UNCERTAINTY
China: prices remain moderate
Source: Círculo de Empresarios based on National Bureau of Statistics of China and Statista, 2022.
% change
After peaking in Oct. 21, producer prices have moderated, but remain
high at 8.8% in Feb. 22
% y-o-y change
Prices grew by 0.9% year-on-year in Feb. 22, 4.3 pp less than before
the outbreak of the pandemic
*The Producer Price Index (PPI) is an indicator that measures the average change in selling prices for local producers of goods and services in China.
5.2
2.3
0.9
-2
-1
0
1
2
3
4
5
6
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
% monthly change % y-o-y change
-0.4
-3.7
9.0
13.5
8.8
-4
-2
0
2
4
6
8
10
12
14
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
15

16. ECONOMY IN TIMES OF UNCERTAINTY
US: economic dynamism in 2021
In Q4 2021, the US economy grew by 5.5% year-on-year, bringing
the annual average to 5.7%
Source: Círculo de Empresarios based on BEA, 2022.
% change % contributions to the percentage change in real GDP 2021 in pp
Private consumption, the main driver of growth in 2021, while
foreign demand makes a negative contribution
0.6
-9.1
-2.9 -2.3
0.5
12.2
4.9 5.5
-40
-30
-20
-10
0
10
20
30
40
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021
% quarterly change % y-o-y change
-3.4% +5.7%
2020 2021
1.5
-2.6
5.3
2019 2020 2021
Private consumption Private investment
Foreign debt Public expenditure
GDP
16

17. ECONOMY IN TIMES OF UNCERTAINTY
US: labour market developments in Q1 2022
Source: Círculo de Empresarios based on Bureau of Labor Statistics, 2022.
130
135
140
145
150
155
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2020 2021 2022
Millions
Employment is only 1% below the pre-pandemic level at 151 million
workers, 562,000 more than in Dec. 2021 Millions and % of labour force
Unemployment moderates to early 2020 levels
3.5
14.7
3.6
5.8
23.0
6.0
0
5
10
15
20
25
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
Unemployment rate Unemployed
Services
86.2%
Manufactures
8.4%
Construction
5.1%
Others
0.3%
17

18. ECONOMY IN TIMES OF UNCERTAINTY
Europe: high level of uncertainty
Source: Círculo de Empresarios based on Eurostat, 2022.
Since the beginning of the invasion of Ukraine, the European macroeconomic environment has been subject to high levels of uncertainty in view of the socio-economic
and geopolitical risks facing the region
ESI (Economic Sentiment Indicator), points (average = 100)
This scenario has a negative impact on the confidence and expectations of households and businesses in the EU-27
-10.2
-19.6
6.0
1.1
12.2
8.8
-20
-15
-10
-5
0
5
10
15
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Consumers Retail trade Industry
Confidence indicators by sector in EU-27, %
Reduction in confidence indicators in selected countries in Mar. 2022 compared to Feb. 2022, pp
18

19. ECONOMY IN TIMES OF UNCERTAINTY
Germany Recovery at risk?
Risks for the growth of the German economy in 2022 from the war in
Ukraine due to its industrial dependence on Russian energy imports
GDP growth forecasts, % y-o-y change
Expectations of price increases soar in 2022 due to the rise in raw
material prices, mainly for energy
Source: Círculo de Empresarios based on Ifo Institute, 2022.
% y-o-y change
2.9
3.1
3.3
2.5
3.7
2.9
2021 2022 2023
Forecasts Mar.22
Forecasts Dec.21
0,5
3.3
0.5
3.1
5.1
1.8
0
1
2
3
4
5
6
2020 2021 2022 2023
Forecasts Dec.21
Forecasts Mar.22
19

20. ECONOMY IN TIMES OF UNCERTAINTY
France and Italy start fiscal consolidation
In 2021, France moderated its deficit and debt after increases in 2020
due to higher expenditures because of the Covid-19 pandemic
Government deficit, revenue and expenditure, % GDP
Italy reduced its government deficit by 2.4 pp in 2021 to 7.2% of
GDP
Source: Círculo de Empresarios based on Insee, 2022.
-3.1
-8.9
-6.5
-9
-7
-5
-3
52
54
56
58
60
62
2019 2020 2021
Revenues Expenditures Public deficit (right axis)
97.4
114.6 112.9
2019 2020 2021
Public debt, % GDP
+17.4
pp
-1.7
pp
-1.5
-9.6
-7.2
-10
-8
-6
-4
-2
0
46
48
50
52
54
56
58
2019 2020 2021
Public deficit (right axis) Revenues Expenditures
Government deficit, revenue and expenditure, % GDP
Public debt, % GDP
134.3
155.6
150.4
2019 2020 2021
+21.3
pp
-5.2
pp
20

21. ECONOMY IN TIMES OF UNCERTAINTY
51.7
32.6
65.6
58
55.2
30
35
40
45
50
55
60
65
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
UK impact of rising energy prices
Rising energy prices have an asymmetric impact by sector in the UK
% enterprises =/> 10 employees reporting impacts of energy price increases on production
and/or supply, weighted by count, 7.Mar.20 - 20.Mar.22
In this context, business expectations deteriorated again, as
reflected in the fall of the manufacturing PMIs
Source: Círculo de Empresarios based on Office for National Statistics and Markit, 2022.
60.2
58.1
52.3
47.1
40.6
37.5
36.7
34.8
30.4
23.5
22.8
21.7
17.4
13.4
Food and beverage*
Accomodation and food service
Manufacturing
Other service
Wholesale and retail trade
Total
Arts entertainment and recreation
Construction
Transportation and storage
Human health and social work
Admin and support services
Professional scientific and tech
Information and communication
Real estate
* Includes manufacturing and wholesale and retail trade in food and beverages.
> 50: expansion of activity
21

22. ECONOMY
Spain

23. ECONOMY IN TIMES OF UNCERTAINTY
1
2
3
4
Efficient and transparent implementation of EU funds associated
with the Recovery and Resilience Plan (RRP)
Fiscal consolidation and welfare state sustainability
Implementation of the structural reforms needed to achieve a
competitive, sustainable and inclusive economic model
SOUND AND
SUSTAINABLE
RECOVERY
Challenges facing the Spanish economy
In an international context marked by uncertainty over the duration and development of the Russian invasion of Ukraine, the persistence of the pandemic, high
inflation, strong volatility and disruption in some global supply and distribution chains
Adoption of measures to control inflation and minimise its impact
on businesses and households without increasing public
expenditure and thus the deficit
23

24. ECONOMY IN TIMES OF UNCERTAINTY
Risks to the recovery of the Spanish economy
Pre-existing downside risks accentuated by the war conflict
Possible emergence of new Covid-19 variants
Bottlenecks arising from disruptions in global value chains, and shortages of raw materials and industrial
metals due to the Ukrainian invasion and domestic strikes/production stoppages
Inflationary pressures, mainly in energy and commodity prices. Attention also to the rise in core inflation
Shortage of labour supply for jobs arising from the green and digital transition
Delays in the implementation of European funds and lack of detail of required reforms
▲ Corporate costs
▼ Production
▼ Exports
▼ Investments
▼ Competitiveness
Uncertainty about legal security in the labour field
Economic impact of existing and future sanctions on Russia and deterioration of trade flows
Normalisation of the ECB's monetary policy
Feedback loop between price growth and wage growth, with ultimate impact on competitiveness
Anticipating tax increases without assessing the efficiency of public spending
24

25. ECONOMY IN TIMES OF UNCERTAINTY
War context slows recovery
Prior to the Russian invasion of Ukraine, the recovery was based on
Reduced health uncertainty due to progress in the vaccination process
Increased public and private investment boosted by European funds in Recovery, Transformation and Resilience Plan
Gradual improvement in tourism
Increased private consumption supported by disbursement of part of the savings accumulated during the pandemic and the recovery of employment
War raises uncertainty and forces downward revision of growth forecasts for Spanish economy
-10.8
2020
5.1
2021
4.5
2022*
% year-on-year change
Bank of Spain
(Apr. 2021)
Source: Círculo de Empresarios based on Bank of Spain, 2022.
Impact on Spanish GDP growth
Oil, gas and electricity price increases
Negative effect on energy-intensive sectors (transport, metallurgy, fishing,
extractive industries or paper manufacturing)
Shortages of raw materials and industrial metals
Negative effect on manufacturing and agri-food industry
Fall in private consumption due to greater uncertainty and lower purchasing
power due to inflation
Slower export growth due to slower growth of trading partners
Increased stress on global supply chains
2.9
2023*
2.5
2024*
* Forecasts. AIReF forecasts growth of 4.3% in 2022, 2 pp less than forecast in the autumn.
0.9 pp lower than
forecast Dec. 21
25

26. ECONOMY IN TIMES OF UNCERTAINTY
More stable health situation
Source: Círculo de Empresarios based on European Centre for Disease Prevention and Control, 2022.
The health and economic impact of the Covid-19 pandemic is receding in a context of high population vaccination, although caution remains in place regarding the
possible emergence of new strains of the virus
% population vaccinated with full schedule (2 doses) by 31 Mar. 2022
Hospitalisations stabilise at low levels
No. of inpatients as at 25 Mar. 2022
Spain is the 8th country in the EU-27 with the highest percentage of full
vaccinated population (14th with the booster dose)
Max. (Malta, 86.1%)
Min. (Bulgaria, 29.5%)
EU-27 average
72.4% % pop. 2 doses
% pop. 3 doses
% pop. > 18 y. 2 doses
% pop. > 18 y. 3 doses
78.4
51.7
86.1
62.7
72.4
52.5
83.1
63.4
>
>
>
>
0
1000
2000
3000
4000
5000
6000
0
5000
10000
15000
20000
25000
30000
35000
2020-08-20
2020-09-22
2020-10-23
2020-11-25
2020-12-31
2021-02-04
2021-03-10
2021-04-13
2021-05-14
2021-06-16
2021-07-19
2021-08-19
2021-09-21
2021-10-25
2021-11-29
2022-01-05
2022-02-08
2022-03-15
Inpatients ICU patients (right axis)
26

27. ECONOMY IN TIMES OF UNCERTAINTY
Q4 2021 GDP moderate progress
Private consumption drives growth, followed by external demand
Source: Círculo de Empresarios based on INE and Bank of Spain, 2022.
In Q4 2021, GDP grew by 2.2% quarter-on-quarter and 5.5% year-on-year, with a contribution of 3.8 pp from domestic demand and 1.8 pp from external demand.
In 2021, GDP grew by 5.1% year-on-year. The Bank of Spain forecasts quarterly growth of 0.9% in Q1 2022
% y-o-y change and contributions to GDP (pp)
By sectors
Agriculture
▼ 4.7%
2.7%
▲ 1.3%
Industry
16.2%
Services
66.5% ▲ 7.7%
Construction
5%
▼3.7%
Weight in % of total and % y-o-y change
27
-4.3
-21.5
-8.7 -8.8
-4.1
17.8
3.5
5.5
-25
-20
-15
-10
-5
0
5
10
15
20
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021
Private consumption
Public consumption
Investment
Foreign demand
GDP

28. ECONOMY IN TIMES OF UNCERTAINTY
7.6
9.8
3
3.4
5,9
7,5
-1
1
3
5
7
9
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
CPI Spain Core CPI Spain HICP Eurozone
2020 average
-0.3 %
2021 average
3.1%
CPI Spain
IPC España
Risk of persistent inflation and stagflation?
Source: Círculo de Empresarios based on INE, Bank of Spain and Eurostat, 2022.
In Feb. the CPI climbed 1.5 points to 7.6%, its highest figure since Dec.
1986. The rise in March brings inflation to 9.8%, the highest since 1985
% y-o-y change
The rise in Feb. is mainly explained by higher energy and commodity
prices, accentuated by the war
Influence of groups on the annual rate of the CPI in February 2021 (pp)
* Forecasts
28
7.5
2 1.6
2022 2023 2024
CPI forecasts
Bank of Spain
* *
AIReF forecasts inflation of 6.2% in 2022

29. ECONOMY IN TIMES OF UNCERTAINTY
5
15
25
35
45
55
65
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
Manufacturing PMI Services PMI
Expectations damaged by uncertainty
In March, the manufacturing and services PMIs fell to 54.2 and
53.4 points, respectively
Source: Círculo de Empresarios based on Markit, INE and CIS, 2022.
Consumer Confidence Index plummets 36 points compared to
February
> 50: expansion of activity > 100: positive consumer perception
Business Confidence Index slows its improvement in Q1 2022
> 100: positive perception
130.6
95.5 95.5
105.5 109.3
114.8
128.9 130.3 127
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
20
40
60
80
100
120
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Consumer confidence index
Current situation index
Expectations index
29

30. ECONOMY IN TIMES OF UNCERTAINTY
Employment and unemployment LFS – Q4 2021
Source: Círculo de Empresarios based on INE and Bank of Spain 2022.
In Q4 2021, unemployment fell by more than the increase in
employment due to the fall in the number of active people
% y-o-y change and % labour force
Until Q1 2021, private sector job losses offset by public sector
employment
9,9%
10,7%
10%
12,2%
8,8%
11,8%
10% 10,9%
10,2%
12,3%
14,6%
16,1%
15,3%
22,5%
17,9%
14.41
16.26
14.57
13.33
13
14
15
16
17
-18
-12
-6
0
6
12
18
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Unemployment rate (right axis) Active
Employed Unemployed
-10
-8
-6
-4
-2
0
2
4
6
8
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Total employment Public Private
% y-o-y change
By 2022, the Bank of Spain
forecasts an unemployment
rate of 13.5% and AIReF
13.2%
30

31. ECONOMY IN TIMES OF UNCERTAINTY
The pace of progress in the labour market stabilises
Source: Círculo de Empresarios based on Ministry of Labour and Social Economy and Ministry of Inclusion, Social Security and Migration, 2022.
In Mar. 2021, the number of unemployed fell to 3.1 million (-21.3%),
and the number of those affiliated reached 19.8 million (+4.8%).
% y-o-y change
The largest declines in unemployment in March were recorded in
Balearic Islands and Canary Islands
5.5%
Agriculture
11.6%
Industry
6.7%
Construction
Affiliation by sectors Mar. 2022
76.2%
Services
-2.5% +3.1% +4.1% +5.7%
-5
-4
-3
-2
-1
0
1
2
3
4
5
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Unemployment Affiliation (right axis)
% y-o-y change
Y-o-y change > -21.3% Spanish average
-10%
-19%
-14.4%
-21.6%
-27.5%
-23.2%
-23.9% -26.6%
-15.2%
-22%
-21.2%
-19.4%
-22.5%
-40.4%
-17.6%
-15.7%
-28.1%
31
% y-o-y change and % of total

32. ECONOMY IN TIMES OF UNCERTAINTY
-115200
-82819
-120000
-100000
-80000
-60000
-40000
-20000
0
2020 2021
Central Adm. Autonomous Regions
Local Entities Soc. Sec.
Financial support PPAA
Persistent imbalances in public accounts
Public debt PPAA
Up to Jan. 2022
118.6% GDP
Public deficit PPAA 2021
Source: Círculo de Empresarios based on IGAE and Bank of Spain, 2022.
6.87
% GDP
Bn €
Million €
0
2
4
6
8
10
12
14
1150
1200
1250
1300
1350
1400
1450
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
PPAA debt
% y-o-y change (right axis)
125.2% GDP
95.5% GDP
The Bank of Spain forecasts a deficit of 5% in 2022 and 5.2% in 2023. Debt would
stand at 112.6% and 112.8%, respectively
Dec. 2019
Mar. 2021 Jan. 2022
32
10.27
% GDP
6.87
% GDP
AIReF reduces its deficit forecast for 2022 by 6 tenths of a percentage point to 4.2%
compared to that of Oct. 21 and estimates that debt will stand at 113.9% of GDP

33. ECONOMY IN TIMES OF UNCERTAINTY
55,024
85,355
97,185
2019 2020 2021
*Reduction of the deficit mainly due to the increase in revenue from social security contributions and the assumption of non-contributory social security expenditure by the State, in line
with the mandate of the 1st recommendation of the Toledo Pact.
Source: Círculo de Empresarios based on Ministry of Inclusion, Social Security and Migration, 2022.
Revenues
Expenditures
€180,919M
Total non-financial revenues 72.9%
SOCIAL
CONTRIBUTIONS
€192,111M
Total non-financial expenditures
72.1%
PENSIONS
10%
y-o-y
26.5%
CURRENT
TRANSF.
5.3%
y-o-yl
4.9%
y-o-y
11.7%
SUBS. AND
OTHER BENEFITS
8.3%
y-o-y
In 2021, the deficit of the Social Security system was reduced
by 58% year-on-year to €11,192 M*
Million €
8.5%
y-o-y
6.8%
y-o-y
In 2021, the Social Security accumulated a debt of €97,185 M
(8.1% of GDP).
Million €
Doubts about the sustainability of social security
-13,131 -11,192
2020 2021
14.8%
0.9% GDP
1.2% GDP
33

34. ECONOMY IN TIMES OF UNCERTAINTY
+48.8% y-o-y
Exports
+29.8% y-o-y
Jan. 2022
Top 3 exports by sector
Trade deficit soars
Source: Círculo de Empresarios based on Ministry of Industry, Trade and Tourism, 2022.
€26,600.8 M
Imports
Balance
€ -6,522.8 M
30.6 % 31.7 %
Exports by destination
63.6%
EU-27
56.1%
Eurozone
9.6%
Americas
% y-o-y change
42.3 %
% total
€33,123.6 M
Energy € -3,358.6 M
In Jan. 2022 the trade deficit is 3.7 times that of Jan. 2021
Non-energy € -3,164.2 M
Food, beverages
and tobacco
▲10.3%
17.5%
Capital goods
▲12.7%
16.4%
Chemical prod.
▲ 53.3%
18%
7.4%
Asia
0.4 %
17000
22000
27000
32000
37000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Exports Imports
Million €
Weight in % of total and % y-o-y var.
X 2.2
y-o-y
X 12.5
y-o-y
34

35. ECONOMY IN TIMES OF UNCERTAINTY
0
10
20
30
40
50
60
70
80
90
Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Million
tourists
2019 2020 2021 2022
times r/ Feb. 2021
International tourist arrivals
x 7.8
Up to Feb. 2022
Tourism better start 2022, but with uncertainty
Source: Círculo de Empresarios based on INE, 2022.
5,643,296 tourists
Tourist expenditure
Up to Feb. 2021
€1,202 per tourist
€6,783.4 M
11.2%
y-o-y
Up to Feb. 22, cumulative
tourist arrivals are still 34%
below the level of the same
period in 2019 and 2020
x 8.7
times r/ Feb. 2021
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Million
€
2019 2020 2021 2022
35

36. ECONOMY IN TIMES OF UNCERTAINTY
MARKETS

37. ECONOMY IN TIMES OF UNCERTAINTY
Stock markets upward trend slowed by global uncertainty
MSCI World Stock Index (MSCI World) remains at all-time highs
Source: Círculo de Empresarios based on Investing, 2022.
After the negative impact of the first days of the war, the main indices have normalised their evolution
Market volatility increases
January 2020 = 100
Price US$
60
70
80
90
100
110
120
130
140
150
160
170
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
IBEX
S&P 500
Eurostoxx-50
MSCI emerging economies
1,852.7
3.231.7
3,049.9
1850
2050
2250
2450
2650
2850
3050
3250
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
Apr-22
37

38. ECONOMY IN TIMES OF UNCERTAINTY
Spanish and Italian risk premia suffer the impact of the
uncertain environment
Source: Círculo de Empresarios based on Investing, 2022.
Inflation puts upward pressure on long-term sovereign bond yields and risk premia
Widespread increases in 10-year bond yields
100 = average 2020
0,4
0,4
0,8
1,5
-0,5
-0,3
0,0
0,5
0,8
1,5
1,8
2,4
0,3
0,8
1,3
1,6
2020
average
2021
average
Jan-22 Feb-22 Mar-22 Apr-22
Spain Germany US UK
66.8
111.7
85.0
147.5
89.2
152.2
Spain Italy
2021 average Q2 2022 average Apr-22
+33.6%
+36.2%
bp
38
Fixed income: rate hikes

39. ECONOMY IN TIMES OF UNCERTAINTY
Thank you