The Government assumes that Spain will not recover the level of GDP prior to the pandemic this year

• Crisis Sánchez proposes an income pact to "avoid an inflationary spiral" and presents a National Plan against the war

The Government is very concerned about the consequences that the invasion of Ukraine by Russia will have on the Spanish economy.

This was evidenced by the President of the Executive, Pedro Sánchez, when announcing yesterday in Congress the creation of a National Plan for Response to the Impact of War after admitting that there is going to be an undoubted “

”.

And it will also take place at a time when the country was expected to rebound strongly.

Or, at least, that was the Executive's forecast, which estimated that at the end of the year the Gross Domestic Product (GDP) would be back at pre-Covid levels.

But in Moncloa they are

and are preparing for a coup that will have numerous ramifications.

Inflation

Until now, the increase in prices was something that would begin to subside from the next first.

The Government itself expected it and the Bank of Spain also affirmed it, for example.

But the context since last week has totally changed.

The threat of a sudden interruption in Russia's energy exports and the increase in the price of oil, explains Funcas, could raise the CPI even to 6.5%, which would be "almost two points more than in the pre-conflict forecast" .

“A higher inflation would erode the purchasing power of households and

of private consumption, with a very significant impact on growth", develops the Savings Banks Foundation.

For her part, the First Vice President and Minister of Economic Affairs, Nadia Calviño, estimated yesterday after the Ecofin meeting that "each 10% rise in energy will have an impact of 0.2 points on the CPI."

And President Sánchez has already called for an "

between social agents to provide stability and avoid falling into an inflationary spiral", that is, that wages do not rise at the rate of inflation to avoid a vicious circle.

Imports and exports

The impact in this area is also very clear and notable.

On the one hand, because "it is more than likely that the

Spanish exports in Russia" and on "the investments of Spanish companies in that country," Sánchez admitted yesterday.

And, on the other, because it is also "more than likely that there will be

from Ukraine, one of the main suppliers of cereals, sunflower oil and other imports of agricultural products."

tourism

Russia is one of the great emitters of tourists who have Catalonia as their destination

, a territory that in turn is one of the greatest tourist powers in Spain.

But the fact is that in addition, the global rise in inflation will also reduce the purchasing power of potential visitors, and the increase in the price of oil threatens to unleash an increase in the cost of airline tickets.

For all these reasons, the impact of the conflict in Ukraine on tourism is undeniable, as President Sánchez also recognized, and it will make it difficult to return to the point of origin after the pandemic in the sector that contributes the most to the Spanish economy.

chinese factor

The economic sanctions of the European Union and the United States on Russia are aimed at suffocating its economy, thus causing Russian President Vladimir Putin to be forced to stop his offensive.

But in this process there may be a factor that notably alters the plan: China.

"If Chinese support is timid and does not provide the loss of income that it will suffer due to US and EU sanctions, Russia will have greater pressure to reach an agreement," explains Raymond Torres, director of the situation at Funcas.

«But if it buys gas, oil, helps companies and financial activity,

», He continues.

And he recalls: «Russia has half of the gold reserves and the Russian Central Bank in China».

Increase

Lower consumption of families due to the rise in prices;

doubts about what will happen with the dammed savings of households;

affected companies;

less tourism... Everything that has been pointed out so far will end up resulting in lower growth.

There is no doubt about it.

How much?

"It is too early to estimate the impact of GDP because it depends on many factors and variables," said Calviño, who preferred not to give a specific figure.

He continued, at first, pointing out that "Spain is the country with the least exposure to this conflict", to which he later added that "it is clear that this aggression has an economic impact".

And when the press conference after that meeting of the Economic and Financial Affairs Council was about to end, the vice president wanted to emphasize that the invasion of Ukraine by Russia is «

».

Conforms to The Trust Project criteria

Know more

• GDP

• War Ukraine Russia

• Inflation

CrisisSánchez proposes an income pact to "avoid an inflationary spiral" and presents a National Plan against the war

War in Ukraine A baby is born in the Kiev metro when his mother was taking refuge from Russian attacks

War«It is a monster that wants to return Ukraine to the empire»

See links of interest

• Last News

• When does the 2021 Income start?

• Income 2021

• Work calendar 2022

• Economy Podcast

• Valencia CF-Athletic Club