BBVA worsens its forecast of GDP growth and calls for cutting inefficient public spending

BBVA worsens its forecast of GDP growth and calls for cutting inefficient public spending


MadridUpdated:

The uncertainty about the political viability of the measures planned by the government lurks on the economy. This is confirmed by BBVA Research in its latest report «Situation Spain» presented this morning in which it worsens its growth forecasts for the national economy for 2018 and 2019 in three and one tenth respectively,to 2.6% (identical to the Government) and 2.4%. The reason for this slump lies with exports and consumption, although investment maintains its muscle.

Despite this, the entry into force of the cataract of fiscal winks of the 2018 Budgets since July, which will result in an increase in public consumption, together with an improvement in private spending, will lead in its opinion to GDP to rebound to 0.7% in the third quarter compared to 0.6% in the previous period.

This minor pull is a political variable in the forecasts of the study service, which still do not incorporate the measures announced last week. BBVA has criticized the«Uncertainty about the measures that will be implemented in the coming years ». An uncertainty that, in his words, "it is necessary to reduce". This uncertainty can decrease by around two tenths of GDP growth.

In particular, BBVA calls for cutting inefficient spending, promoting the modernization of the Administration. "The advisable thing to diminish the imbalance in the public accounts would be the identification of inefficient expenditure and their elimination, "they complain, while in the face of raising taxes they discourage the one directed at the" tax burden on labor and on companies ".

The head of macroeconomic analysis, Rafael Doménech, has abounded that with the measures announced the 1.8% deficit that the government predicts can be met, although they believe that the expenditure will be two tenths higher on the GDP while the incomes will be a tenth lower than those predicted by the Government. This is explained by the Freezing of public investment. Despite this, he pointed out that the plan "should be executed not only by the Government but by all administrations. There is some doubt about it ».

On the rise of 22% of theMinimum Interprofessional Salary(SMI) at 900 euros per month in 2019, Doménech has analyzed that "most of the affected workers will see an increase in salary but some will be exposed to an extinction of employment".

In particular, the rise affects 10% of employees who account for less than 4% of the salary mass. The economist has asserted that the increase in income for Social Security by this measure will occur if this wage increase responds to an increase in productivity similar. In this sense, for 2019 the entity has predicted that the remuneration per employee will rebound with force of 0.9%, which will rise in 2018 to 2.1%.

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