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The Government of Sánchez denies the end of the economic cycle marked by all the indicators

2019-08-12T00:10:44.583Z

The economic cycle is running out. The Government of Pedro Sánchez does not want to recognize it and tries to relativize the situation. Talk about "moderation" and that growth is still "rob


  • It advanced 0.5%. GDP slows and Spain reduces its growth to 2014 levels
  • Real estate. The brick cools: the sale of homes suffers its biggest fall since the crisis
  • According to the IMF and Brussels, the slowdown looms over Spain: GDP will grow by less than 2% in 2020
  • Daniel Lacalle. "Europe takes the slowdown very seriously, here the government falls into complacency"

The economic cycle is running out. The Government of Pedro Sánchez does not want to recognize it and tries to relativize the situation. It speaks of "moderation" and that growth remains "robust." But the data is stubborn. They show a slowdown that numerous indicators published in recent weeks have noted and that, without exception, have moved the economy to the first years of recovery or, even, to exercises in which Spain was in full recession.

The evolution of the Gross Domestic Product (GDP) itself, without going any further, testifies. The National Institute of Statistics (INE) published on the last day of July the data related to the progress of National Accounting, which showed a growth of 0.5% in the second quarter of the year with an alarming drop in domestic demand. The figure represented a two-tenth slowdown compared to the previous quarter, higher than the 0.6% estimated by the Bank of Spain and, more importantly, the smallest progress since 2014 .

A "predictable" figure, according to the Ministry of Economy led by Nadia Calviño, who also pointed out that this situation would not prevent the improvement in the growth forecast for this year that he wants to announce. The official figure is 2.2%, while the International Monetary Fund (IMF) or Bank of Spain estimates 2.3% and 2.4%, respectively. Those tenths of difference are the ones that probably want to raise Economy. But beyond this, the really important thing about the forecasts of these organizations, as well as of the European Commission itself, is that the growth in 2020 will be the lowest since the beginning of the recovery.

BBVA Research warned last Thursday that, far from being a "predictable" fact, the growth between April and June had been worse than expected. «After surprising slightly downwards in the second quarter of 2019, the growth of the Spanish economy could be around 0.5% during the third quarter». «If the above is confirmed», they added from the institution's study center, «this would mean two consecutive quarters below the average quarterly growth observed in 2018». " The known data consolidate the slowdown in domestic demand, while the external one recovers some traction," they concluded.

Growth 2019. Growth

Bad growth data followed, just a few days later, unemployment. The number of unemployed registered in the offices of the State Public Employment Service (Sepe) was reduced in July by 4,253 people, a figure that forced to go back, not until the beginning of the recovery but to 2008, when the recession began to be noticed .

The limited reduction also occurred in a month that usually offers positive figures because the summer campaign encourages, and much, the services sector. Probably for this reason, the acting President of the Government assured during his failed investiture that unemployment would fall by 3 million in July. But the data, once again, showed that Sanchez was wrong and that the number of unemployed still exceeds that level.

«BBVA Research estimates indicate that [corrected for seasonal variations and calendar effect] the number of Social Security affiliations grew by 20,000 people, 10,000 less than last month. The known information suggests that this loss of traction could be prolonged over time, ”they explain in this regard from the aforementioned firm, whose analysts also do not rule out that“ the first quarterly increase in registered unemployment may occur in the third quarter of the year. since the second quarter of 2013 ».

All these circumstances did seem to alert Calviño more, who called for "a fully operational government" and defended that the economic outlook "would be more positive" if there were "a situation of legal certainty and political stability." The moderate concern, however, quickly disappeared from the Government's speech since, shortly after, the Minister of Finance, María Jesús Montero, resumed the message that the Executive always wields when asked about the slowdown: « Spain grows more than the rest , in a robust and sustained way ».

20190807 buying and selling houses

The official message was not modified nor by the worrying figures for the sale of homes that the INE had released just the day before. Statistics found that in July just over 40,000 operations were closed, 9% less than in the same month of 2018. On this occasion, that fall forced us to go back to 2012 to find a worse data. But if the comparison is made with respect to the previous month, that is, June over May, the collapse amounts to 13.8%, data of which there is no precedent in the historical series that the INE began in 2007 .

In this negative evolution, the new legislation in force in mortgage matters played an important role, as indicated by the Idealista real estate portal. But also, and according to the same analysis, the economic situation and the " political uncertainty ", which is causing many investors to postpone their activity until the moment in which a government is formed and what will be the policies of that Executive in the sector of the brick.

The industrial sector also registered a bad data in August, and with the fall of the production of 1.8% it prolonged the recession in which it has been immersed for months. And to all this, of course, we must add the negative context in which the European and world economy is. The trade and currency war between the United States and China, the risk of contraction in Germany, the weakness of the euro zone as a whole and Brexit are drawing a scenario that has already led many analysts to point out the two dreaded words: global recession .

Spain, obviously, is not immune to these problems and yes, although the economy continues to grow above the European average and will continue to do so, we must also highlight the following paradox: just as the greater activity abroad was key in the recovery, that substantial and applauded change in the composition of the economy could become, on this occasion, a new obstacle .

According to the criteria of The Trust Project

Know more

  • Maria Jesus Montero
  • Social Security
  • GDP
  • Nadia Calviño
  • Unemployment
  • Pedro Sanchez

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Source: elmuldo

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