Despite the rapid external slowdown, the BBVA study service considers that the Spanish economy will hardly slow down this year. According to its forecasts published on Wednesday, GDP growth will stand at 2.4% in 2019, just one tenth below the 2.5% registered in 2018 and above the Government's estimate, calculated at number 2, two%. By 2020, the advance of the activity will slow down to 2%, still very robust rates.
During 2018 there was a deceleration of the growth rate in five tenths, from 3% to 2.5%. According to BBVA, the reasons were for the external deterioration, the lower strength of the tail winds and lower business confidence. However, the study service highlights that in the last quarter of 2018 and in the first of 2019 a slight acceleration has been observed, based on the fact that the price of oil has become cheaper, exports continue to grow, monetary policy continues to provide momentum and fiscal policy will be expansive. The latter "means detracting future growth and bringing it to the present," said Rafael Doménech, responsible for economic analysis at BBVA Research.
All of which implies that the cruising speed of the activity will practically remain. So it will even increase the gap between a Spanish economy that still holds, and the rest of the eurozone, which suffers a much more intense slowdown. However, BBVA has indicated that the uncertainty about the rate of growth has increased a lot, and has stressed that, if the Budgets are approved, the tax increase could subtract up to two tenths and leave the GDP advance at 2.2%.
In the opinion of the bank, the public deficit could have ended last year at 2.1% of GDP had it not been for the measures taken by the Government, such as increases in pensions or salaries of officials, which will lead to the budgetary mismatch up to 2.7% of GDP. Without approved budgets, the deficit will end this year at 2.3%. And if they are approved, in 2%, BBVA supports.
Impact of the minimum wage
"The notable increase in the minimum wage for 2019 can condition the evolution of the economy and employment," says the BBVA Research note. According to his calculations, in the short term it could stop creating about 60,000 jobs in the central scenario. The fork that shuffles is between 20,000 and 75,000. In the medium and long term, the impact on employment would reach 160,000 people, although in the worst case, up to 319,000 would be lost. The Bank of Spain had already estimated that 125,000 jobs could be destroyed in the year.
According to the BBVA economists, whether or not these projections are met on the increase of the SMI will depend largely on the evolution of productivity: if this improvement would have a lesser effect, although currently this indicator goes up to zero or negative rates. It also depends on whether the companies will absorb that rise in their margins, an understanding of the business income that BBVA detects that has already started in recent quarters. And finally, if active policies are improved to relocate the affected groups.
Regarding whether the increase in the minimum wage in the January membership has already been noted, "something can be seen because it has been worse, but it is still early." In some community such as Extremadura and the Canary Islands, where it has more impact, they have had a behavior But also other autonomies very conditioned by the minimum wage have not shown that worse evolution ", explained Jorge Sicilia, chief economist of BBVA.
Regarding the external environment, "there is a moderation of international growth, but little more than that, "said Sicilia, although there has been a sudden outbreak of volatility in the markets due to expectations of slower growth, these turbulences have been contained, partly due to the actions of central banks. The entity, while acknowledging that the risks to growth now paint much worse.
Europe will benefit from the delay in the path of rising rates, the moderate price of oil and a certain fiscal boost. In addition, at the moment it is not appreciated that protectionism is weighing too much on the eurozone. However, BBVA reminds that commercial tensions could still affect and that Brexit or Italy represent very important risks.
The forecasts of BBVA are aligned with those of the Fiscal Authority, which estimates that growth will remain at 0.7% in the first quarter of the year. However, in recent weeks Many houses of analysis have reduced their predictions at lower rates. Funcas and the Council of Economists have recently cut their growth forecast for this year to 2.1%. And the governor of the Bank of Spain, Pablo Hernández de Cos insinuated in Congress that he could slightly reduce his forecast current, set at 2.2%.