Spanish Economy Surges With A 1.3% GDP Growth Boost Since 2021
Spain News
Published: 19 September 2023 11:47 CET
The Spanish economy's recovery from the pandemic has proven to be more robust than initially projected, as indicated by the recent upward revision of economic data by the National Institute of Statistics (INE). In real terms, the gross domestic product (GDP) has gained an impressive 1.3 percentage points.
The substantial correction primarily applies to the growth observed in 2021, which has been enhanced by nine-tenths, reaching an impressive 6.4%. Furthermore, the growth rate for 2022 has been raised by three-tenths, now standing at 5.8%. The previously reported collapse in 2020, attributed to the COVID-19 pandemic, has also been slightly adjusted downward, now registering at -11.2%.
These revised figures provide a fresh perspective on Spain's recovery journey from the pandemic, which had been challenged due to the country's heavy reliance on services and tourism. With the revised data, Spain managed to reclaim its pre-pandemic GDP levels by the end of 2022, ahead of earlier projections that suggested a recovery by the first quarter of 2023. Consequently, Spain no longer stands as the sole country failing to recover its pre-pandemic GDP in 2022, positioning itself alongside France, Italy, and Germany. However, it remains distant from nations like Poland, which has exceeded 2019 levels by 10%, and the Netherlands (6%), Greece (4%), or Portugal (3%).
The INE's ability to release these new estimates is credited to the incorporation of data from structural surveys and more definitive sources. Notably, 2021 saw the most significant revision, as it was a year marked by an economic rebound amid the challenges of the pandemic. It was also a year when discrepancies arose between the INE's data and that of the Tax Agency, which indicated even more substantial growth. This discrepancy led to debate within the government regarding the accuracy of these calculations.
Despite the upward revision, the public deficit for 2022 is expected to show only marginal improvement, reducing by one-tenth compared to the previously reported 4.8%. The combined debt of all administrations is now at 111.6% of GDP, down from the previously reported 113.2% at the end of 2022. Total spending on pensions, including civil servant pensions, is expected to decrease marginally from 13.5% of GDP to 13.4%. On a per capita basis, GDP stands at 28,162 euros.
"The magnitude of the review is not high. We are talking about an increase of 1.4% in the accumulated level compared to the 12.5% accumulated growth that has occurred during the recovery between 2022 and 2021," explains Rafael Doménech, an economist at BBVA. This places Spain's revision in line with other European countries, such as the Netherlands (1.3 points) and the United Kingdom (1.1 points), while Germany adjusted by 0.6 points, and France made a slight downward correction.
However, this adjustment falls short of the expectations of some government officials and experts who had anticipated the economy to surpass the INE's calculations by 6% to 8%. This difference in estimates has prompted debates and even led to the resignation of the former president of the INE, Juan Manuel Rodríguez Poo, last year. It's worth noting that the INE's work is continually supervised by the European statistical agency Eurostat.
The review also reveals Spain's growing dependence on the foreign sector, with exports accounting for 40.9% of GDP in 2022, compared to 34.9% in 2019. Imports have similarly increased, from 32% to 39.7%, making the Spanish economy more sensitive to international conditions.
In terms of income distribution, compensation of employees now represents 47.8% of GDP in 2022, surpassing pre-pandemic levels. Meanwhile, the corporate surplus with mixed incomes stands at 42.4%, slightly lower than previous years. The Ministry of Economy has emphasised that this revision will allow for the achievement of the objective of reducing public debt to below 110% of GDP by 2023.
Source
https://elpais.com/economia/2023-09-18/el-ine-revisa-al-alza-el-crecimiento-de-la-economia-espanola-el-pib-avanzo-13-puntos-mas-desde-2021.html
