The economic recovery from the pandemic was somewhat stronger than the INE had calculated. The National Statistics Institute published an upward revision of Spain’s annual accounts on Monday: the gross domestic product rose by 1.3 points in real terms. Most of the correction corresponds to 2021 growth, which improved by nine tenths and reached 6.4%. In 2022 the rate will rise by three tenths to 5.8%. And the drop due to Covid in 2020 is a tenth lower: -11.2%.
These new figures slightly change the story about the recovery from coronavirus, which in the Spanish case has been severely hampered by the high importance of services and tourism. With these statistics, this happened at the end of 2022 instead of the first quarter of 2023. This means that Spain is no longer the only country that had not returned to its pre-pandemic GDP in 2022, remaining at a level similar to those of France at the end of last year, Italy and Germany. Although it is still a long way from countries like Poland, which was 10% above 2019; Holland, 6%; Greece, 4%, or Portugal, 3%.
The INE was able to publish these new estimates by incorporating information from structural surveys and more meaningful data. 2021 is the year that will be rated the most. It was the year in which economic activity began to recover and in which it was most difficult for the INE to measure the numbers in a context as exceptional as the pandemic, with numerous shocks and, at the same time, profound changes in the economy. It is also the year in which the figures of the Statistical Institute differ the most from those of the Tax Authority, whose collection this year shows significantly greater progress even after this update, a fact that part of the government has used to cast doubt on it to draw calculations.
With the revised figures, GDP at the end of 2022 is 1,346 trillion euros, 19,269 million more than the previous estimate. That means: 1.5% more. Nevertheless, the public deficit will barely improve by a tenth compared to the 4.8% in 2022. The debt of all administrations stands at 111.6% of GDP, compared to the 113.2% recorded before the end of last year. And total spending on pensions, including pensions for civil servants, will only improve from 13.5% of GDP to 13.4% this year. The GDP per capita is 28,162 euros.
“The scope of the assessment is not high. We are talking about an increase in the cumulative level of 1.4% compared to the cumulative growth of 12.5% during the recovery between 2022 and 2021,” explains Rafael Doménech, BBVA economist. It is in similar ranges to the increase in the Netherlands of 1.3 points and the increase of 1.1 points in the United Kingdom. Germany reported an increase of 0.6. France, on the other hand, had revised its estimate slightly downwards.
However, this improvement is far from what part of the government and some experts had estimated. Some members of the executive had even defended that the economy was at a level between 6% and 8% higher than what the INE calculated based on the collection and affiliation figures. So much so that government pressure led to the resignation of then-President Juan Manuel Rodríguez Poo in the middle of last year. In this sense, the review was very short and it seems that Elena Manzanera’s entry into the organization does not represent a change in the vision she offers. The INE always reminds that its work is in any case monitored by the European statistics agency Eurostat. On the contrary, some members of the government use the statistics of the tax authority and social security to disagree with these results. The difference between the two would be justified primarily by the degree of emergence of the shadow economy and the number of hours worked post-Covid. According to the INE, the higher number of sick leaves and the increase in the weight of sectors where fewer hours are worked explain why working hours and therefore GDP are lower.
“The INE review was modest and went in the expected direction,” says Raymond Torres, economic director of Funcas. As Torres points out, the contribution of the foreign sector is slightly deteriorating due to service exports and tourism. On the other hand, domestic demand is improving with more investment (2% compared to 2019), private consumption (1.4%) and public consumption (1.1%). Inflation means that real household purchases remain at a level below that of 2019. By sector, the decline in agriculture, the slight deterioration in the construction sector, the slight recovery in industry and the significant improvement in the service sector are noticeable.
The Ministry of Economy emphasizes that the review will make it possible to achieve the goal of keeping public debt below 110% of GDP earlier, namely in 2023. It also shows that the share of salaries in GDP increases by more than one point. “The data confirms the adequacy of the response of the economic policies applied in these years,” said a statement from the department headed by Nadia Calviño.
It is worth mentioning the great importance that the foreign sector has acquired in these years: exports have increased from 34.9% of GDP in 2019 to 40.9% in 2022. And imports increased from 32% to 39.7%. This means that the Spanish economy will be a little more sensitive to the foreign situation after the pandemic.
As for income distribution, worker compensation is 47.8% of GDP in 2022, still a few percentage points above what was typical in the pre-Covid years. The operating surplus with self-employed income is 42.4% and is slightly lower than in previous years.