- First quarter The INE revises growth upwards and the Government considers pre-pandemic GDP recovered
The National Institute of Statistics (INE) will publish on Monday the Annual National Accounts of Spain between 1995 and 2022 and will take advantage of the compilation to review the magnitudes of recent years, especially that of 2021 and, by drag that of 2022. The 2020 estimate, which is currently provisional, will become final; that of 2021, which is now an advance, will become provisional; and that of 2022 will appear as progress. Before the publication occurs, the controversy has already erupted.
Are these revisions common?
Yes, they are, because when the Spanish economy has traditionally fallen, it tends to fall more than what has been collected in the short-term indicators and vice versa: the recovery process is usually more intense than it seems, which is due to the fact that the indicators have a certain delay and not all are able to pick up short-term changes in the cycle.
In September of last year the INE already made a review and raised the GDP of 2021 by four tenths, from 5.1% to 5.5%. In addition, these changes occur in all countries, in fact the United Kingdom Statistics office did the same last week, collecting 2% more GDP growth between 2021 and 2022.
What is less common is that the revision supposes a very substantial change with respect to the series initially disclosed. The problem is that the pandemic made it difficult to measure the economy, so all economists expect a revision, given that other indicators published a posteriori are far from those included in GDP, and that this is upward, although there are discrepancies regarding the magnitude.
How much will the review be?
Only the INE knows. There are economists who dare to make forecasts and others who avoid doing so. Raúl Mínguez, director of the Research Service of the Spanish Chamber of Commerce, believes that an increase of more than 1% "would be excessive and would require a very well-argued methodology." For Manuel Hidalgo, researcher at EsadeEcPol and the Pablo de Olavide University, "everything that is more than 2.5% could be too much and something exceptional", while there are some like Daniel Fuentes, professor at the University of Alcalá and former advisor to Pedro Sánchez in La Moncloa, who believe that "the current level may be 2 or 3 points above estimates".
Why does it generate debate?
Simplifying the conflict, there are those who argue that if the upward revision is very few points, it will be because the INE measures the economy incorrectly; while, on the contrary, others argue that any exaggerated revision of GDP could invite us to think that the agency is somehow cooking the data.
In between, the opinion of the experts is imposed: "The INE will make the review it has to do and taking into account all the data, because it is the only one that has all the information. One of the problems is that those who have been saying for 3 years that the economy has not recovered the pre-pandemic level, if they now revise GDP upwards by 4 points, will see how their story has fallen," says Manuel Hidalgo, researcher at EsadeEcPol and Pablo de Olavide University to EL MUNDO.
He defends the work of the Institute: "If you ask Eurostat about the INE they tell you that it is, if not the best, one of the best statistical institutes in Europe and that it is among those that receive the least recommendations, so if the INE says that 3% must be reviewed, it is because there have been measurement problems in the worst years of the pandemic that can now be corrected".
Along the same lines, Gregorio Izquierdo, general director of the Institute of Economic Studies (IEE) and former president of the INE, points out that: "measuring the National Accounts is very complex and is only available to institutions with a team of highly qualified technicians such as the INE. Exceeds individual capacity... that level of resources, qualification and experience is only in the INE," he says.
What would be the consequences of a review?
An upward revision could mean, for now, that Spain recovered the pre-covid level of GDP (that of 2019) much sooner than we thought. "We could bring forward a couple of quarters the moment in which we recovered the GDP pre-pandemic and it would be in 2022 and not this year," says Hidalgo.
In addition, a revision of last year's GDP could translate into a change in growth expectations for this year, although that will depend in turn on two factors. On the one hand, the structure of growth, that is, whether the economy advanced more than expected in the first or second part of the year, since if it occurs in the second it could have a drag effect (purely mathematical and that economists call carry over) in this year.
On the other hand, Raúl Mínguez, director of the research service of the Chamber of Commerce of Spain, points out that the impact in 2023 "will depend on where that revision comes from", since it is not the same that the revision occurs because there has been more consumption than expected (that, for example, could indicate that we have saved less than thought and that the possibility of expanding spending more in the future is lower). or that investment has been stronger or the foreign sector has pulled more than previously believed.
The revision of GDP will also affect all the magnitudes that are measured in relation to it, such as the public deficit or public debt. "It all depends on how strong the revision is, but it can mean one or two tenths less deficit, depending on how much it is. If the revision of the INE is eight points, as some predict, it would be three tenths less deficit, "says Miguel Cardoso, chief economist for Spain at BBVA Research.
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