COVID-19 uncertainty alert: Economic forecasts are complicated by a scenario of prolonged high inflation and an increase in the cost of debt.
Uncertainty. That is the most repeated word when talking about the economic prospects for the coming months, both in Spain and globally.
The COVID-19 pandemic marked the economic scenario of 2020 and 2021.
When, after accelerating vaccination, it seemed that 2022 would be the year of economic recovery, the Ukrainian war came.
The international scenario, with high upward pressure on energy prices, has triggered inflation and the supply chain has become more complicated.
COVID-19 uncertainty alert
In this context, the Minister of Economy and first vice president of the Government, Nadia Calviño, recognized that the global inflation scenario will last longer.
"We have to work with a new scenario of higher inflation for a longer time internationally," Calviño said at the opening of the economic seminar Sustainability and recovery: the levers of economic change, organized by the APIE together with the Menéndez Pelayo University and BBVA that is being held these days in Santander.
Despite this circumstance, Calviño took advantage of the measures put in place by the Executive to mitigate the effects of inflation and "cushion the rise in international prices."
The vice-president thus referred to both the gasoline price bonus and the gas cap thanks to the "Iberian exception".
The global economic slowdown will complicate previous growth forecasts and delay entering pre-pandemic levels to 2023, compared to previous more optimistic prospects.
Despite this, Calviño stressed that the forecasts for Spain estimate a "solid and relatively higher growth than the surrounding countries."
In this regard, he stressed that the main national and international organizations predict GDP growth for this year, which will be in the range of between 4% and 4.8%.
COVID-19 uncertainty alert scenario
This scenario of rising prices is also marking the salary negotiation. "We cannot accept the criterion of indexing wages to inflation," said the president of CEOE, Antonio Garamendi, at the same meeting, warning of the danger of doing this and turning a short-term situation into something "structural" and would be a "mistake."
The president of the businesspeople stressed that the income pact must go "much further" from the national agreement of the conventions, it is not only the national agreement of conventions (ANC).
"We would have signed the amounts that the unions have proposed. But fixed amounts. Inflation is not a quantity, it is inflation, which is different," he explained, justifying this position in avoiding "second-round effects" and making this price increase structural.
For their part, the unions consider that a real income pact should include a salary revaluation figure that would be effective now, along with a later salary revision clause, which prevents workers from losing out at this time of rising prices.
COVID-19 uncertainty alert statements
"What we would avoid with a salary revision clause is to transfer the price increases to salaries at this moment and that it was something that would be effective at the beginning of the years," said Pepe Álvarez, general secretary of UGT.
"We see it in the same way, companies are already passing on the cost increases," said Unai Sordo, who highlighted that 46% of the two hundred subclasses of the CPI are already growing at 5% or more and that 38% of them are doing so at 6% or more
The decisions of the European Central Bank (ECB) will be another aspect that will mark the economic future of the euro area. Now, the supervisor has pointed to a rise of twenty-five basis points for July and predictably, a similar one in September.
In addition, after announcing this decision on June 9 and seeing how the markets were getting nervous seeing the end of the stimulus, the ECB met again urgently on June 15 to announce a special mechanism with which to try to curb the doubts of the markets.
Although Calviño called for tranquillity regarding the rise in financing costs because he considered that Spain had done its homework during these years of negative rates, the president of the Independent Fiscal Responsibility Authority (Airef) was less optimistic.
"Our fiscal situation is insufficient to stabilize our public debt levels," said Cristina Herrero, pointing out that, although the data are showing a reduction in the deficit and public debt, this is due to economic growth and not so much to the adoption of fiscal measures to reduce these items.
This increase in the cost of state financing in figures, as Herrero warned, would mean that by 2025 the State Budget would have to absorb 12,000 million euros more in interest expenses.
# COVID-19 uncertainty alert #
