BBVA warns that the rise of the SMI already takes away employment and that uncertainty will remove 2,200 million GDP


Spain faces the economic slowdown with greater strength than the countries of our environment but testing their future cushions before a horizon full of elections. BBVA Research has worsened this morning its growth forecasts for 2019 to 2.2% and for 2020, to 1.9%, two and one tenth less respectively that his previous estimation. Of the two tenths of this year, one is due to the lower purchases of the Eurozone, but the other is born of political instability. In the latter case, the negative impact will reach 0.2 GDP points according to the entity, that is, it subtracts 2,200 million euros of future growth to the activity.

«In this context, and after the elections this spring, the key will be the ability to reach agreements on the necessary measures to continue the recovery (...). The delay of these agreements and measures could result in a highest level of uncertainty and, consequently, in a greater negative impact on the activity ", assumes BBVA Research in its Situation Spain.

Up to 5,000 million euros invoiced

If the Executive were not formed promptly, the bill would be higher: it could subtract four tenths of a percentage point from growth, which would have an effect of up to 5,000 million euros on GDP. The procés in Catalonia and the political paralysis After the motion of censure, it reduced even more the GDP, up to 0.25 points in 2018. In this way, the entity has gathered that since 2015, the last year with an Executive with an absolute majority, political uncertainty has subtracted two tenths on average each year, so the cumulative impact amounts to about 10,000 million euros in four years.

The study service of the entity has gathered that although the deficit was reduced more than expected in 2018, increased the structural imbalance, that is, beyond the benefits of the current economic cycle. In this way, he still does not expect the public hole to fall below 2% of GDP until 2021. And he warns that after the polls, an adjustment of public investment and spending is expected to contain the imbalance to 2.2% this year, 11,000 million more than the objective of 1.3%.

The other great novelty is that BBVA has calculated the effects of some approved decrees by the Government on the electoral horn. In the case of the new rent decree, the entity warns of the lower investment that may result, after three different rental laws have occurred in the first three months of the year.

The consequences of the new Minimum Wage

BBVA Research has also confirmed the negative effect of the rise of 22% of the Minimum Interprofessional Wage (SMI) at 900 euros per month. «The impact is concentrated on the most vulnerable groups», the head of Macroeconomic Analysis of BBVA Research, Rafael Doménech, has resolved in a press conference. The entity estimated that the increase could subtract up to 195,000 jobs in two years to the economy, depending on how companies decided to transfer this increase in labor costs to prices or margins.

These groups with lower salaries and a higher incidence of the measure are under 30 years, sectors such as commerce, hospitality and real estate activities, and regions such as Extremadura and Murcia Canary Islands. According to Doménech, while in the rest of the groups employment increased compared to last year, in these first three months of the year among these sectors of the population, the growth in employment was affected by 0.3 points.


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