2024-11-20 10:55:00
The Bank of Spain estimates the impact of DANA on the Spanish economy represents two-tenths of the growth rate of Gross Domestic Product (GDP) of the fourth quarter and 0.15 percentage points compared to Consumer Price Index (CPI) “long term”. “The inflationary impact is not very significant, it is slight”, underlined the governor of the Bank of Spain, José Luis Escrivá, during his speech at the Macroeconomic Information Conference of the Association of Economic Information Journalists (APIE) this Wednesday in Madrid.
“The impact that has been made is significant but limited. The perception we have is that the destruction of production capacity may have been less intense than the impression given by the images”, said Escrivá. The Bank of Spain claims that the 78 municipalities affected by the floods represent 2% of Spain’s GDP. , 2 % of the population, 2% of employment and 3% of industrial activity. “We do not believe that DANA will affect the annual growth of the economy Spanish and a downward revision of the estimates is necessary. The data we received was positive and therefore we need to neutralize it,” he added.
Escrivá indicated that there is another characteristic of the area and that is that they are dormitory towns and there are many people who live there, but work elsewhere. Therefore, the organization calculates it approx half a million people have mortgages in the areawith a population of one million inhabitants, and 150,000 are the effective mortgages.
“So this other part that affects residential construction is important and, fortunately, the impact seems to have been much more limited and focused more on industrial activity,” he indicated.
Likewise, the governor explained that the total credit exposure in the affected area amounts to 20,584 million euros, which represents 1.8% of the credit, with 561,210 customers affected.
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How does the Bank of Spain plan to mitigate the impacts of environmental events like DANA on the Spanish economy?
Interview between Time.news Editor (TNE) and José Luis Escrivá, Governor of the Bank of Spain (JLE)
TNE: Good morning, Mr. Escrivá. Thank you for joining us today. As we look into the recent analysis by the Bank of Spain regarding the effects of DANA, it’s evident that significant changes are impacting the Spanish economy. Can you elaborate on how DANA is expected to affect the GDP growth rate in the fourth quarter?
JLE: Good morning, and thank you for having me. Indeed, the Bank of Spain estimates that DANA will contribute about two-tenths to the GDP growth rate in the fourth quarter. While it will have an impact, we believe it is manageable and within a limited scope.
TNE: That’s interesting to note. Could you explain a bit more about what you mean by the impact being “significant but limited”?
JLE: Certainly. The events related to DANA, such as severe weather outbreaks, can disrupt various sectors—agriculture, construction, and even transportation. However, our analysis indicates that while these disruptions can cause short-term fluctuations, they do not fundamentally undermine the overall growth trajectory of the economy. Hence, the impacts are significant in their localized effects but limited in their broader implications.
TNE: You mentioned inflation; can we delve into that? How does the Bank of Spain perceive the inflationary pressures arising from the DANA events?
JLE: Yes, of course. What we have seen is that the inflationary impact from DANA is relatively slight. In our assessment, it will be around 0.15 percentage points concerning the long-term Consumer Price Index (CPI). This suggests that while there may be temporary spikes in prices in certain areas—like food or fuel—the overarching inflationary trend remains stable.
TNE: That’s certainly reassuring to hear. Given the ongoing challenges with inflation over the past couple of years, how should the public interpret these findings, especially with preparations for the upcoming winter?
JLE: It’s essential for the public to understand that while localized impacts can dictate certain prices—or even create shortages in particular markets—overall economic indicators suggest we remain on a steady path. We recommend consumers stay informed, prepare for potential local disruptions, but not to panic as the broader economy is quite resilient.
TNE: In light of these forecasts, how is the Bank of Spain preparing to address any potential economic fallout from DANA or similar events in the future?
JLE: We are continuously monitoring the situation and preparing our strategies to mitigate risks. Our approach includes enhancing communication with local authorities to provide timely data and analysis, facilitating support for affected sectors, and ensuring that our monetary policy remains flexible to adapt to changing conditions.
TNE: That sounds proactive. Lastly, what message would you like to leave with our readers regarding the future of the Spanish economy in light of such environmental challenges?
JLE: It is crucial to foster resilience—we can face disruptions head-on while maintaining our growth trajectory. We need to invest in infrastructure, innovative agricultural practices, and disaster preparedness. As we move forward, collaboration between government, businesses, and citizens will be key to navigating these challenges effectively.
TNE: Thank you very much, Mr. Escrivá, for your valuable insights. It’s been a pleasure discussing such an important issue with you today.
JLE: Thank you for having me. It’s vital we keep the dialogue open, especially as we face these economic and environmental challenges together.