2023-06-11 09:10:10
It is incredible that an enormous controversy has been generated by the statements of Alberto Núñez Feijóo affirming that “The Spanish economy is stagnant.” The reality is that he is not without reason no matter how much government propaganda bothers him. The National Accounts data published by the INE reflect two consecutive quarters of contraction in national demand.
Household final consumption spending fell by 1.3% in the fourth quarter of 2022 and also fell by 1.7% in the first quarter of 2023. Domestic demand has fallen by 1.6% in the last two quarters , declining 0.8% each quarter, and private investment has fallen 0.7% in the last three quarters. That, gentlemen, is stagnation.
The GDP is sustained by the admirable recovery of tourism -which the ministers of the Sánchez government have demonized so much-, the effect of public spending financed with debt, the extraordinary effect of European funds and the fall in the prices of raw materials in international markets –which reduces imports– and, with this, the foreign contribution to GDP improves, are all external factors.
We already have the data for the entire euro area for the first quarter and, once again, Spain appears at the bottom in recovery. Despite the fabulous good progress of tourism
–that sector attacked by the Government on innumerable occasions–, Spain has not yet recovered the GDP of 2019 and remains far behind the 24 comparable countries, with the highest unemployment rate in the OECD and the EU by far, and with the highest increase in debt over GDP in the countries of the European Union, five times more than the average, according to the latest Eurostat data. This poor performance can also be seen in the OECD expectations, which show that Spain will not fall below 12% unemployment in 2024 or 109.9% debt over GDP, a structural deficit of 3.2% of annual GDP and with an inflation estimate of 3.9% in 2024which would also exceed the euro area average.
However, it is alarming to see the speed with which the Government of Spain has impoverished the Spanish people. While boasting of “lowering the light”, Eurostat dismantles the propaganda and recalls that The electricity rate in Spain is 22% more expensive than the EU average, one of the highest and much higher than that of Portugal, which also applies the “Iberian exception”. The Iberian scam in Spain passes the cost of the gas cap on the other hand on the same bill.
Eurostat data reveals the impoverishment of the entire population. GDP per capita adjusted for purchasing power has plummeted from 91 in 2018 to 85 in 2022, the EU average being 100 and Spain’s level of 93 in 2017. In other words, we are losing positions compared to the average and countries like Slovenia, the Czech Republic, Cyprus, Lithuania or Estonia. These data are especially worrying when, in addition, Spain is the country where the tax burden on families has increased the most. The collection for the Personal Income Tax (IRPF) has skyrocketed by 42%, with real wages not reflecting an increase since 2019 and seasonally adjusted hours worked still below 2019 levels.
No, Mr. Feijóo is not wrong in his diagnosis of the economy but, above all, any economist should be concerned when this string of poor data has been generated by squandering the largest fiscal and monetary stimulus in history. What will happen when the placebo effect of European funds, the tailwind of tourism recovery and cheap raw materials fade, and the Executive exhausts the massive accumulated leverage? You have to prepare for a much more difficult environment because the Government leaves you without doing your homework.
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