The Spanish economy is still very strong, given the slowdown in Europe due to family consumption and rising public spending. These two factors, which once again increase Spain's total debt, allow Spain to remain, except for the strong slowdown that Europe is experiencing. BBVA Research is reduce its growth estimate by two tenths for the whole year for its January assessment, but it is still 2.2%, well above 2%.
The company has published a report on the situation in Spain on Monday, which has lowered these two tenths, taking into account the recent series of INE's recent series and the European economy. But BBVA does not consider it no signal indicating strong deceleration In Spain, "despite the slowdown in global growth," said Rafael Doménech, responsible for BBVA Research's economic analysis.
The high employment trend: 130,000 vacancies in the country with 3M unemployed
Traditionally, the number of job vacancies increased when the unemployed were inadequate, but now it is rising, although the unemployment rate is over 14%. What happend?
The company estimates that GDP growth in the first quarter of the year was 0.6% compared to the last three months of 2018. This good pace is based on household and public consumption. At the beginning of the year, the income of some families has improved thanks to. T. 22.5% of the minimum interprofessional salary (SMI), but also to some extent slowing down employment in the most vulnerable sectors and regions. In particular, the BBVA warns of poorer employment "for young people, those who traditionally work in low-wage services such as trade or hospitality, and the population in Andalusia, the Canary Islands, Extremadura and Murcia", says the report.
The increase in the minimum wage is one of the main risks facing the Spanish economy in the coming months
Although still It is early to determine what the joint impact will be As a result of the increase in SMI, BBVA Research believes that this is one of the most important risks Spain will face in the coming months. The company estimates that this year's unemployment rate will be reduced to 13.9%, which is lower than the previous forecast, and employment creation will be 2.2%. In addition, BBVA believes that wages will continue to accelerate this year and unit labor costs will increase by 1.9% and Compensation per employee 2.1%that will harm Spanish competitiveness.
Expansive fiscal policy contributes to economic growth. BBVA Research estimates that public consumption this year will grow by 2.2%, highest since 2012, mainly as a result of the electoral calendar. Yes, an advance on public spending in the second half of the year, when the election cycle is over, could diminish, and administrations have to adjust to limit the deficit. In any case, the company has no doubt that Spain will not be able to adjust because the government deficit will end at 2.2% this year and 1.9% in 2020.
[La crisis que nos acecha]
Despite the good pace of the Spanish economy, the company has warned that growth forecasts may be reduced if the risks presented are met. Although the BBVA estimates that the "war of trade" will be resolved in the coming months, it is not clear what the future of Brexit will be, which can have a major impact on the European economy. In addition, he appreciates it US recession risk over the next two years it will be over 50%, which could be a blow to the global economy. "The risks to these growth forecasts are downward," said BBVA Research Director and Chief Economist of BBVA Group, Jorge Sicilia.