“Of course in the last quarter.” That’s how forceful the prosecutor and member of the Fundación Civismo, María Crespo, pronounced before the question asked by elEconomista.es. In addition, and given this situation, and from a political point of view, the PP’s deputy economic secretary, Juan Bravo, points out that this is the moment to take advantage of the crisis to transform Spain.
And he is not the only specialist person who manifests himself in this sense. In our round of experts, economists such as Daniel Lacalle, Lorenzo Bernardo de Quirós, Salvador Marín, Javier Santacruz, Daniel Rodríguez Asensio, Santiago Sánchez and Sergio Ávila, among others, also foresee a technical recession at the end of the year that, at the latest, will have place in the first quarters of 2023.
Other analysts maintain, as is the case of Gregorio Izquierdo or José María Rotellar, that although they do not believe that Spain will end the year in recession, they do predict a difficult autumn with a drop in activity, an increase in unemployment and a high rate of inflation and , without ruling out more contingent scenarios with supply restrictions.
The indicators
The starting point of these evaluations is in the economic indicators. Variables such as business confidence -in decline-; the latest inflation figure, 10.8% -the highest since 1984-; the increase in unemployment in July, by 3,230 people, placing it at the worst reference in decades, in this traditionally job-generating month; the indebtedness of families with a drop in savings in 2022 of minus 0.8%, compared to positive savings in 2021, of up to 8.3%-; or the ECB interest rate hike of 0.75 points, support this scenario.
the american factor
In full Perte of the Electric Vehicle, the collapse of the registrations of passenger cars and all terrains in Spain has been 12.5%, with a 12% interannual rate. But it is also weighing down the national debt of 1 trillion 400 billion, the fall in the manufacturing sector, and the price of fuels, and the strong international instability.
All factors that, in the opinion of the experts consulted, point to a recession in the productive sector or technical recession, which will begin to be evident once the high season for tourism ends. Circumstance, which can be seen at the end of the year or, in the first two quarters of 2022.
And as if all this were not enough, experts look at the leading macroeconomic indicator that indicates that the US economy is already in recession.
The rise in rates and the dissaving of families
For María Crespo, prosecutor and member of Fundación Civismo, “of course in the last quarter we are going to enter a recession. The United States has already entered a recession, an early macroeconomic indicator of what is going to happen in Europe.”
But Crespo also maintains that “it is likely that there will be a recession, because there is a rise in interest rates that are moving forward, and with which it is intended to curb the effect of inflation in the micro sphere of families, whose indebtedness is very high.”
And it is that, “the rise in rates – he points out – shows a bad situation. A decision that the ECB has taken for the economies of Italy and Spain, while Germany, for its part, has in its memory the inflation that he lived with the Weimar Republic; and he doesn’t want this to happen again.”
“This recession is getting ahead of itself, although it is being offset by other national accounting indicators”
In microeconomic terms -he analyzes-, “this recession is getting ahead of itself, although it is being offset by other national accounting indicators. That is why technically we have not entered a recession. Because there have not been two consecutive quarters of falling GDP.” But adds Crespo that, “in the last quarter, private savings have fallen to -0.8% of their disposable income. That means that we consume much more than we earn. Without forgetting that, the 2021 savings rate, compared to this quarter of 2022, it was 8.3%”.
“This dissaving -collects the economist- is evidenced because the private debt in 2022 is 1,427 million, when the savings of 2021 was 14,516 million euros. And despite the economic illusion of Keynesian policies, through the Next Generation -concludes-, the Spaniards are highly indebted. We do not generate wealth. The GDP does not grow and we spend more than we earn, so that, probably, in the fourth quarter of 2022 we will close in a technical recession”.
*The productive sector
Daniel Lacalle, economist and head of Tressis, explains that “if we analyze the data from the manufacturing index for July, it is already contracting. And if we look at the service data, tourist consumption for July is already falling compared to similar months in normal times. Thus, -he describes-, services and manufacturing, are already in contraction. And in addition, the demand for electricity already shows it and that of gas as well. Therefore -he persists-, perhaps in aggregate, the GDP, which always it comes out relatively better, it does not reflect a recession, if the European funds are applied, and public spending is also kept high.But -Lacalle concludes- the evidence from the productive sector is that the contraction has already arrived, and therefore, the recession in terms of the productive sector, it is very possible in the coming months.”
*From stagflation to recession
For Lorenzo Bernardo de Quirós, president and partner of the consulting firm Freemarkt Corporative, “the Spanish economy is moving steadily towards an inflationary recession, a much more complicated phenomenon than the already complex stagflation that is where we already are”.
Unless the INE fixes it, says the economist, “the fourth quarter of 2022 and the first quarter of 2023 will almost certainly register a contraction in GDP, which translates into a technical recession. Without a doubt,” he adds, “the war It has had an important effect, but it has accelerated a trend towards the loss of vigor in the Spanish economy since the last quarter of 2021, further aggravated by the succession of inadequate economic measures by the Government.
*The ‘economic sentiment’ indicator
Salvador Marín, director of the Studies Service of the General Council of Economists, maintains that “all the advanced indices have been pointing to a recession. This is the case of the manufacturing PMI, which is the worst figure in a year and a half. In addition, the employment data they are clearly stagnant and falling, and the ‘economic sentiment’ indicator fell by 1.8% in June. Other movements in the markets are going in the same direction. And, the euro-dollar parity has not been seen for many years, while interest rates are rising, in a context of an economy with practically no growth, with signs of loss of competitiveness and, with some funds that continue to not enter the real economy, and skyrocketing inflation. underlines the director of the CGE-, with all these data, and we would like to give others, if they are not the prelude to a recession, it seems very much “.
*clamp inflation
In the opinion of Javier Santacruz, principal investigator of Civismo, “it is evident that, not at the end of the year, but in the first or second quarter of next year, we will find ourselves with a recession. In arithmetic terms, even the last quarters of the year, even if they were zero, or negative -he points out-, the growth rate for the whole year would be around 4%.In that sense, a recession is inevitable, since it is the way to clamp down on inflation, which is one of the consequences of interest rates rising sharply in the coming months. And this consequence -says Santacruz-, is more complicated in the case of Spain, since, of the large European economies, Spain is the country that has not yet precovid GDP recovered”.
*Lower purchasing power
Sergio Ávila, Markets analyst at IG, defends that we are still in high season for tourism, and therefore we continue with growth data, the PMI for the services sector continues to expand (last data 53.8), which indicates that this quarter, growth is likely to remain positive. But the problem, he warns, will come after the summer, once tourism ends the high season. In fact, he insists, the manufacturing sector has already shown a contraction of 48.7%; the ECB rate hike will begin to have a greater impact in the fourth quarter of the year, once rates are raised again in September, the personal income tax rate now stands at 47% from the previous 45% , causing consumers to have less purchasing power, and to this is added an unsustainable inflation of 10.8%. So -substance-, in this context, expects the first quarter of GDP decline to be the last of 2022 and, we enter a technical recession in the first quarter of 2023 (technical recession: two consecutive quarters of GDP decline).
The July strike alerts us
For the economist Santiago Sánchez, “the leading indicators of the Spanish economy have been deteriorating in recent weeks in a worrying manner, anticipating the deterioration that most analysts expected for the end of the year, and that has become more evident with the worst unemployment data for a month of July in 20 years”.
You just have to look, he proposes, at retail trade, which has had negative rates of -0.1% for two months in a row (May and June), by product, Food is the only one that presents positive data (+1.9%).
After two bad years in terms of vehicle registrations, 2020 and 2021 -he highlights-, “this month of July we have witnessed a 12.5% drop in registrations of passenger cars and all-terrain vehicles, with a cumulative annual drop compared to 2021 of 11%”.
“The leading indicators are anticipating the worst possible scenario”
And then there is consumer confidence -he clarifies-, which “shows the negative perception of citizens about the future, with a pessimistic view of their future as a result of inflation, uncertainty and the Government’s erratic economic policy decisions.” That is why -he affirms-, “it is not surprising the little contribution of household consumption to the GDP data that we have known this year”.
In short -he summarizes-, “the advanced indicators are anticipating the worst possible scenario, with negative growth for the last quarter of the year and the first of 2023, where the bad unemployment figure for July alerts us to a deterioration in the Spanish economy faster than initially expected”.
The economist Daniel Rodríguez Asensio has always defended that the first quarter with negative GDP data in Spain was going to be the fourth of 2022. That is, the technical recession will come in the first of 2023. And this is due in part “to the good tourist season, which was predictable in Spain and, in fact -he points out-, it is happening. Of course, with a notable drop in average tourist spending. Now, the data for the second quarter has surprised on the rise, it has been better than expected expected. For tourism, of course,” he says. Not surprisingly, Rodríguez Asensio maintains, his base scenario for a technical recession “will be in the first quarter of 2023, although it is a purely…
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