The institution calculates a lower impact of the PRTR than the Government estimates
MADRID, 4 Oct. (EUROPA PRESS) –
The Independent Authority for Fiscal Responsibility (AIReF) has endorsed the macroeconomic scenario that accompanies the General State Budgets (PGE) for 2023, although it sees significant downside risks in terms of the growth of the Gross Domestic Product for 2023, which the body places at 1.5%.
The Government’s scenario contemplates real GDP growth of 4.4% in 2022 and 2.1% in 2023, compared to the 1.5% forecast by AIReF for next year, which is five tenths less than its latest estimates for July.
In the area of ??prices, the Executive contemplates a slight reduction in the GDP deflator in 2023 to 3.8%, compared to the 4% expected for 2022, in a scenario of a sharp slowdown in the private consumption deflator. AIReF, for its part, estimates a GDP deflator of 4.3% in 2023.
According to the body led by Cristina Herrero, in 2023 downward risks prevail over the growth estimated by the Government. Their estimates of real growth are in the upper range of the probability intervals estimated on the basis of AIReF’s forecast scenarios, while the estimates of the GDP deflator are in the central range.
AIReF will publish its full forecasts in the 2023 Budget Report scheduled for October. Said forecasts propose a real growth for 2023 of 1.5% and an increase in the GDP deflator of 4.3%.
In addition, the institution also notes that the Government’s forecasts are above the average of the most recent estimates made by the main analysts.
Among the risks, AIReF points to the deterioration in the growth prospects of the main advanced economies and an increase in gas prices greater than that contemplated in the technical assumptions of the Government’s scenario.
In this sense, he explains that the assumptions about the growth of the European economies in the Government’s scenario come from the forecasting exercise prepared by the European Central Bank (ECB) before the cut in Russian gas supply materialized. Since then, the energy crisis has led to a significant deterioration in the United States, China and all European economies. The downward revisions are notable in Germany, which is remarkable given the country’s close interrelations with the rest of the European economies and its weight in Spanish exports.
In addition, AIReF highlights the escalation of geopolitical tensions with Russia and the difficulties of the European economies in managing the energy crisis, which pose additional risks to the growth contemplated in the Government’s scenario and in that of AIReF itself. In his opinion, there is a lot of uncertainty about whether the European economies will be able to find alternative energy sources to Russian gas at reasonable prices and whether the energy saving measures will be effective.
In the domestic sphere, AIReF assures that the deterioration of the purchasing power and confidence of households represents another source of downward risks. In the first half of 2022 there has been a contraction in compensation per real employee of close to 6%, thus exceeding the contraction observed in the fourth quarter of 2012, of 5.2%.
Likewise, the agency points out that a rapid tightening of financing conditions is taking place. This, together with the deterioration of their confidence -which is at records similar to those observed in the months of strict confinement experienced at the beginning of the pandemic- could lead to a greater increase in savings than that considered in the Government’s scenario.
In the area of ??prices, AIReF considers that the Government’s forecasts seem reasonable since the base effects on energy and the prospects for a slowdown in global demand lead to expect a drop in inflation in 2023.
Likewise, the high rates of inflation have prompted a rapid tightening of monetary policy at a global level in order to prevent expectations from being disembedded and to avoid wage and price spirals. Added to this are the measures that the Government and other countries have adopted to limit the increase in energy prices. All this justifies the slowdown in inflation that the Government expects. All in all, the persistence of high inflation rates increases the risk that companies and households will try to recover their margins and purchasing power.
On the other hand, compared to the Government’s scenario, AIReF estimates a lower impact on economic growth associated with the Recovery, Transformation and Resilience Plan (PRTR).
Estimates recently presented by the Ministry of Economic Affairs and Digital Transformation suggest that, as a whole, the PRTR would have increased the level of GDP by 0.7 points in 2021, 1.9 points in 2022 and 2.8 points in 2023, compared to to a scenario without Plan.
On the other hand, AIReF estimates that in 2021 the impact would have been practically nil due to the delay in materializing investments, while an impact of 0.8 points in 2022 and 2 points in 2023 on the level of GDP is estimated with respect to a scenario without Plan.
For all these reasons, AIReF has formulated a new recommendation for the Ministry of Economic Affairs to consult AIReF on the Economic Situation Report that serves as the basis for the budgets of Public Administrations.
It also reiterates the need to have information on the budgetary and fiscal measures incorporated in the macroeconomic scenario, as well as the need for the guarantee process to be regulated by means of a memorandum of understanding.
