“The Spanish economy is stagnant.” The phrase was said by the leader of the PP, Alberto Núñez Feijóo, in a business forum held this Thursday in Madrid. A statement that does not match the actual data of the Spanish economy. The growth of Spanish GDP in the first quarter was 0.5% compared to the last quarter of 2022, which represents a year-on-year growth of 3.8%. Spain grew 5.5% in 2021, 5.5% in 2022 and the OECD forecast for the end of 2023 is for growth of 2% or more. With Germany and the Eurozone in recession.
The OECD confirms that the Spanish economy will grow by 2.1% in 2023, double that of the euro area
Further
Feijóo has participated in a session South Summit. “Spain has to think about economic growth, there is no other possibility of getting out of the situation we are in”, Feijóo started his ‘speech’. “Either we grow up or we won’t go out. Either we grow or we fall behind. Either we grow or we will have difficulties ”, he added.
In the opinion of the PP candidate for the Presidency of the Government, he has highlighted that “the clinical history is not good”, in reference to Spain. “We are in a moment of stagnation, and the most pessimistic believe that we are in economic decline because we have not yet recovered the GDP of 2019”, he stated, adding: “Of every four unemployed in the EU, one is Spanish, we have lost purchasing power and disposable family income has fallen.
Feijóo has pointed out that “unjustified triumphalism is a bad diagnosis” and has called for “realism”. “We are not well, the Spanish economy is stagnant,” he pointed out.
But Spain does not suffer “stagnation” or stagflation (the feared stagnation of activity and rising unemployment with high inflation rates). The data for the Spanish economy rule out both situations, despite the fact that Germany and the euro area as a whole entered a technical recession in the first quarter and are suffering higher price rises in recent months.
Our economy leads growth in the European Union (EU). After advancing 5.5% in 2021 and another 5.5% in 2022, between January and March, GDP grew 0.5% compared to the last quarter of last year, remaining two tenths of a point away from completing the recovery from the shock of the pandemic. On the other hand, that of the euro area contracted by 0.1%, for the second consecutive quarter, which is considered a technical recession.
Compared to the first quarter of last year, Spain’s economy grew by 3.8%, almost four times more than the euro area as a whole (1%), which suffers greater damage from price rises and does not enjoy the ‘pull’ of tourism that is making a difference in our country, together with the strength of the rest of the foreign sector, the historical stability of the labor market due to the latest reform and the outstanding deployment of the Recovery Plan.
In addition, Spain supports the lowest inflation in its environment, with the forecast that in 2023 it will remain below 4% on average, 2 percentage points more moderate than in the euro area as a whole, thanks to the fall in energy prices and government measures, such as the cap on gas, tax cuts on electricity or discounts on fuel.
This same Wednesday, the OECD confirmed that the Spanish economy will grow by 2.1% in 2023, double that of the euro area as a whole. The institution has improved our country’s GDP advance forecast and equals it to that of the Government. For 2024, it projects a growth of 1.9%, also leading the developed countries.
“Lower inflation and a resilient labor market will support household consumption,” explains the OECD team of analysts, which, on the other hand, highlights “stronger external demand, which will support export growth [incluyendo el ‘tirón’ del turismo]”. The protection of workers’ income, especially the most vulnerable, and access to housing are the real current challenges, according to most institutions.
Feijóo promises cuts
Feijóo has also offered his recipe to alleviate the, in his opinion, bad prospects. “We are not able to balance income and expenses, and we have a 4.8% deficit. Portugal 0.4%, we 4.8% ”, he pointed out. The PP leader has also pointed to the increase in public debt as another of the problems facing the Spanish economy, despite the fact that the risk premium is below 100 basis points.
The right-wing candidate has proposed “controlling the country’s accounts.” “We cannot continue with this imbalance between income and expenses, and this public debt,” he assured. But the only recipe for the right to reduce public spending, the deficit and the debt is to make cuts. Because, in addition, Feijóo has promised to eliminate the tax on large fortunes and the wealth tax, and rejects the extraordinary taxes on the benefits that banks and energy companies have achieved thanks to the war in Ukraine and its impact on inflation and the electricity cost.
However, forecasts suggest that our country will reduce the debt below 110% of GDP and the deficit below 4%, even 3%, already in 2024, in line with the requirements of the EU, in which New fiscal rules continue to be negotiated, after the previous ones were suspended due to the pandemic.
Feijóo has committed to an “educational reform oriented towards dual vocational training”, with an eye on “excellence and equity”. Everything, to conclude that “education cannot be bought or inherited”.
