BBVA Research further deflates the recovery for this year and warns: “This is not the time to raise the SMI”

BBVA Research estimates that the economy will grow this year by 5.5%, that is, half a point less than what it had forecast until now and, more importantly, it is far from the almost 10% expected by the Government. Therefore, it deflates the recovery that the economy will register in this year as a result of the outbreaks, the confinement measures and the so-called drag effect after the slowdown that the Gross Domestic Product (GDP) suffered in the fourth quarter .

Specifically, their estimates suggest that the economy grew “slightly” in the last period of the year, between 0.1% and 0.2%, data that once again is far from what the Government came to advance, and specifically, the Minister of Social Security, Josà © Luis Escrivá, who pointed to a figure close to 2.4%. A very sharp slowdown that will make entry into 2021 weaker than previously anticipated. And that same data, added to the strong rebound in the third quarter, means that the collapse in the whole of 2020 it is a historic 11%.

“The effect of the restrictions adopted to prevent a further spread of COVID-19 and the exhaustion of some of the public demand policies put downward pressure on activity. Thus, It can be assumed that the recovery at the beginning of 2021 is being slower than previously expected. although, in any case, a turning point could be foreseen and the growth rate accelerating in the second half of the financial year “, they develop from BBVA Research.

In addition, and for the first time, the entity’s research service includes a provision for 2022, a year in which it expects growth of up to 7%. In the opinion of the team led by Jorge Sicilia and Rafael Domà © nech, the European recovery plan, the so-called NextGenerationEU, will have a “growing effect” in the coming years and will allow the economy to advance further.

This is not the time to raise the SMI

In this complex context, BBVA Research is clear in its position on the Interprofessional Minimum Wage: “This is not the time to raise the SMIThis has been stated by the chief economist for Spain at BBVA Research, Miguel Cardoso, who has stated that in the last few months there has been “a relatively high increase in the SMI, the effects of which we have not yet been able to assess.”

According to the data compiled by Cepyme and Randstad Research, between 2016 and 2020 the SMI has rebounded 43% in Spain, and if the increase to 1,000 euros that for this year a part of the Government, that of Podemos, is , the accumulated increase would reach 52%. It is a figure, obviously, of a very relevant proportion and that according to most economists it is impossible that it does not have a negative impact on employment.

And as for another of the existing controversies within the Executive, that of pensions, Domà © nech has indicated that the calculation of benefits must be carried out with the whole working life. This proposal is in line with the 35 years that Escrivá wants to impose and that Podemos rejects since it implies a reduction in the amount of pensions.

Investor doubts

Almost at the same time that BBVA Research made its forecasts public, the Vice President of Economic Affairs, Nadia Calviño, faced the two hundred investors who attended his appearance at the Spain Investors Day and that they made him share their misgivings about the recovery of Spain and the Government’s plans for the country’s economy.

During question time, the attendees took the opportunity to question Calvià ± o about the management that the Executive plans to make of the aid funds from Brussels, as well as the Government’s commitment to reducing public debt, the reform labor or the optimistic forecasts on which the Budgets for 2021 are based.

The vice president, for her part, has tried to convince them of Moncloa recipes And, like the rest of the ministers who have participated in the forum these days, it has tried to offer an image of transparency and strength in the markets now that foreign investment is more necessary than ever.

For these purposes, Calvià ± o has indicated that the forecast for Spain is a inertial growth of 7% without taking into account the Investment Plan and European funds -although the official government estimate is 9.8% and all budget planning is made based on that prediction, hence the doubts of investors-, and continue the path of job creation that began in the third quarter of 2020, when 570,000 jobs were created.

In addition, he has ensured that the labor reform will be agreed with the social agents and will be included, together with the pension and tax reforms, in the Investment and Reform Plan to be sent to Brussels “as soon as possible”.

Regarding the reconstruction funds from the European Union, the vice president explained that they will be destined to the investments that have been targeted in the Recovery, Transformation and Resilience Plan and has wanted to launch a message of “commitment” to fiscal consolidation.

And the optimism of Forecasts for 2021 AccountsCalvià ± o has said that the Executive has made a “moderate” forecast, in parallel to a higher tax collection than expected, and despite the fact that “international capital continues to trust Spain,” he has also remarked that it is necessary to continue reducing public debt, which this year will reach around 120% of GDP.

Nor has he left behind the structural reforms that, in his words, the Government plans to move forward and that range from education and vocational training to energy, from the labor market to pensions, from the improvement of the business climate and a better regulation of the tax reform, of mobility sustainable, and the modernization of public administration, as well as bankruptcy regulations.