The Spanish public sector has responded more timidly than most EU countries to the economic crisis associated with the coronavirus pandemic. The Bank of Spain calculates that measures taken to combat the economic impact of the Covid-19 crisis They add up to a cost of around 2.5% of GDP, when in the euro area they stand at an average of 3.5% of GDP.
From the General Directorate of Economy and Statistics of the Bank they have indicated this Monday that a good part of this cost – 1.7 points of GDP – has been related to the labor measures, such as exemption from the payment of contributions or extraordinary employment regulation files (ERTE), reports Efe.
In fact, in a presentation by Óscar Arce, director general of Economy and Statistics of the supervisor, it is observed how countries like Spain that had less fiscal margin had more difficulties in launching economic stimuli to relaunch the economy. It should not be forgotten that Spain had a deficit of 2.8% in 2019, well above that committed to the community authorities, which has made it difficult for Spain to face more fiscal stimuli to the recession, which could cause the Gross Domestic Product (GDP) plunges to 22% in the second quarter of this year.
Unemployment will be higher in 2021 than in 2020
Precisely the ERTE explain that in the most benign scenario the unemployment rate is higher in 2021 than in 2020, since it is not ruled out that part of the workers affected by files end up in unemployment, although the Bank of Spain points out that it will depend on how its regulation is detailed.
The projections also have a certain degree of delinquency in the ICO credits guaranteed by the State, which could exceed 4,000 million euros in the period, although the General Directorate of Economy and Statistics warns that this is not a “fine estimate” but rather replicates behavior from other crises.
Conversely, Bank projections do not incorporate the impact of the minimum vital income -which was approved when they had already closed the collection of information-, which is expected to increase the consumption of the most vulnerable households, according to this body.
In that sense, the household savings It has seen an increase due both to the inability to make spending decisions in the current circumstances and due to precaution in the face of uncertainty, a trend that will reverse as the recovery progresses.
The different scenarios of the Bank of Spain
In an early recovery scenario, Spanish GDP would fall 9% this year, and would rebound 7.7% and 2.4% in 2021 and 2022, according to the document of economic projections of the Spanish economy for 2020-2022 published this Monday by the Bank of Spain.
In a gradual recovery scenario the reactivation would be slower and the economy would decrease by 11.6% this year, it will go on to grow by 9.1% and 2.1% the following two years.
With respect to unemployment, the entity calculates that the unemployment rate will be between 18.1% and 19.6% this year and between 18.4% and 18.8% in 2021, while the public deficit will climb to a fork between 9.5% and 11.2% this year and between 5.8% and 6.8% the next. Public debt will oscillate this year between 114.5% and 119.3% of GDP, to be between 111.7% and 115.9% in 2021.
The Bank of Spain explains that given the “Extraordinary level of uncertainty” Currently, it has chosen to create several alternative scenarios, for which a scenario called “early recovery” and another one of “gradual recovery” is contemplated, as well as one of risk. In the latter, GDP could fall 15.1% this year.
The estimates collected in the two main scenarios, of early and gradual recovery, suppose a improvement compared to the latest forecasts presented on May 18 by the Governor of the Bank of Spain, Pablo Hernández de Cos, who pointed to a decrease in GDP of between 9.5% and 12.4% this year, with a recovery in 2021 insufficient to reach the previous level, registering a economic advance of between 6.1% and 8.5%. In this regard, the entity states that the comparison is “limited” as the methodological approach has varied.