"The Spanish economy would have grown, in the fourth quarter of the year, according to the information available so far, at a quarter-on-quarter rate of 0.6%, as in the two previous quarters." The deceleration of activity in Spain throughout 2018 it would have been notably less intense than in the euro area as a whole, which, in part, could be due to the inclusion in the General State Budgets (PGE) for 2018, which came into force in the summer, of some measures that have boosted the income of households, "says the Bank of Spain by way of summary.
Household consumption continues to encourage the economy and with the rise of pensions and salaries of officials, the income of some families has grown, which has underpinned the purchases. In addition, oil has fallen in the final stretch of the year, and in a country so dependent on imports of foreign oil, that is a relief for the pockets.
The Bank of Spain, however, warns that the slowdown is coming and Spain should be prepared. "The central scenario of evolution of the activity of the Spanish economy would not be immune to a hypothetical materialization of some of the disturbances coming from the external context". Among those external factors of uncertainty, the body led by Pablo Hernández de Cosa, highlights several: global trade tensions and a certain hardening of global financial conditions; the future of budgetary policy in Italy or the uncertainty surrounding the way in which the United Kingdom will finally leave the European Union; concerns about the course of the Chinese economy, which seems to slow down; and the loss of dynamism of European exports abroad, among other elements.
Priority: reduce debt
The recipe for Spain proposed by the Bank of Spain is clear: continue with the reforms, but not undo all that have been undertaken in recent years. "Economic policies can make a significant contribution to reducing the degree of vulnerability," he says.
The one that he insists the most, and here clearly coincides with the warnings that other public bodies such as the IMF have made, is the need to maintain sound accounts. "In particular, the design of a well-defined strategy for the lasting reduction of the structural public deficit and the indebtedness of the Public Administrations would help to create some room for maneuver so that fiscal policy can face the consequences of a possible slowdown in the activity and to limit an eventual increase in the cost of financing of public and private agents, "he recommends.
The labor reform
The Bank of Spain also launches a notice to mariners about possible changes in the labor market. Something veiled, but of course: undo the labor reform, as is among the objectives of the Government of Pedro Sánchez (which negotiates to eliminate some key points) can, according to the Bank of Spain, be counterproductive. "The deployment of a catalog of reforms that promote a more efficient functioning of the labor and goods and services markets would also help to increase the potential growth of the economy and its resistance to external shocks." In this sense, it is appropriate to maintain and reinforce the main elements of the current legal framework of the labor market that favor that the adjustment in this market is compatible with less job destruction during the recessive phases, as well as the elimination of regulations that limit competition in some product markets ", asks.
It is not the first time that the Bank of Spain launches this notice to the Government. A week ago, the governor Pablo Hernandez de Cosa and gave his opinion on the matter about the negotiation maintained by the government and unions to eliminate some points of the labor reform of the PP. "It is important not to reverse the things that have been done well, and we must make a positive assessment of the labor reforms of 2010 and 2012. They have allowed us to lower the country's unemployment rate and contribute to economic growth," he said last Friday. in Barcelona, in a conference.