The INE recognized this Thursday that the recovery we have been talking about in recent months is closer to stagnation than strong rebound expected after months of total confinement due to the pandemic. The agency yesterday revised the evolution of GDP in the first semester by almost two tenths of a percentage point and exposed the Government and other study services who relied on their provisional data to improve their projections for Spain in 2021 and 2022.
In the second quarter of the year, the Spanish economy advanced by 1.1%, compared to the 2.8% that had been estimated in the advanced data due to a mirage on consumption. The reality is that Spanish companies and households are being much more cautious than expected and their spending has not been enough to pull hard on GDP.
In addition, between January and March, the Spanish economy fell by 0.6%, compared to the -0.4% initially estimated, so that in the first half of the year as a whole, Spain remained practically stagnant with an increase in GDP of barely four tenths.
Now, in order to comply with the forecasts that have been promised for 2021, it would be necessary grow about 6% in the second semester of the year, something that seems complicated, since the summer data show that consumption has not been as buoyant as the Ministry of Economic Affairs predicted, as the Bank of Spain acknowledged last Tuesday.
Impact on accounts
This situation will have repercussions in the public accounts and in the deficit of the State. In fact, they have left Budgets 2022 outdated before they begin their processing in Congress.
In one or two weeks, the Government will bring to the Cortes public accounts that are being prepared on a macroeconomic framework that incorporates a gap of about 13,500 million euros in GDP, as can be seen from comparing the data that the INE reviewed this Thursday with the forecasts of other official bodies.
Last Tuesday, the economic vice president, Nadia Calvin, updated the macroeconomic table as a previous step to present the General State Budgets (PGE) and established a scenario in which GDP will grow by 6.5% this year and another 7% next year.
That same day, the Bank of Spain revised its projections slightly upwards for this year and the one that comes with the argument that it had been “surprised” by the robustness of economic growth in the second quarter of the year thrown in the advance of the Quarterly National Accounts.
However, the surprise for the organization was capital this Thursday, when the INE published a downward revision of the final figure for GDP growth between April and June of almost two points, up to 1.1% (compared to 2.8%) and also increased the contraction of the first months of 2021.
Difficult situation
The statistical institute excused this reduction in the Difficulty in making economic projections in the current situation, aware that change is important because force the downward revision of the growth estimate of all study services that have prepared their calculations on a 2.8% growth scenario in the second quarter.
Nevertheless, the Government does not plan to incorporate this new calculation to his macro picture, as confirmed by the secretary of State of Economy, Gonzalo García Andrés, in a statement to Efe after knowing the new data from the National Accounts.
The INE is an autonomous body, but attached to the Ministry of Economic Affairs and Digital Transformation. Thus, It is striking that Calviño came forward to review its forecasts last Tuesday to ratify its table, when the message that is being launched now from government circles is that it is most likely that the Budgets will not reach Congress until the first week of October.
If we look at the forecasts made by the Bank of Spain in June (with a more prudent scenario for the second quarter), the projection is that the economy would have grown 6.2% in 2021 and 5.8% in 2022. And this, in an optimistic scenario in view of the latest official data.
The lag between this last growth figure and the one estimated by Calviño reaches 13,500 million euros. An important figure so that the Treasury can more comfortably calculate its income for the year 2022. We will have to wait to know if the AIReF endorses this macro picture after the cut in the official data by the INE.
Present some accounts with an inflated revenue forecast it can have direct repercussions on the public deficit.
However, this is not the first time that the government has made this miscalculation. Without going any further, to prepare the Budgets for 2021, he established a macroeconomic table in which an estimated GDP growth for this year of 9.8%.
Given the lower growth, Calviño had to adjust that calculation with Budgets already in force, up to 6.5% in 2021. In other words, in this case, the gap has exceeded 37,000 million euros in terms of GDP this year.
Now, despite the adjustment that the vice president has been making on her forecasts, economists consulted by this newspaper consider that the government’s scenario is still too optimistic. Especially now that the INE has poured this jug of cold water on the recovery of the first semester.
Added to the weakness of the rebound in the first quarter is a battery of elements that play against the economic rebound. Among them, the inflationary rebound -which will hit its ceiling in November-, energy prices, supply problems in international trade chains and the possibility that Spaniards will not spend the expected savings in the coming months.
These errors in the macroeconomic picture represent a blow to the credibility of Spain before the European Commission and with international investors. Now, with the new data, it can be deduced that the economic recovery that had been proclaimed at the beginning of the year has hardly occurred. This is something that clashes with the discourse that Spain is one of the international economies that is recovering more strongly in 2021.
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Reference-www.elespanol.com