🚨📉 Recession coming, Spain's independent financial watchdog admits
Socialist government denies possibility of recession. AIREF says their forecast meets the standard technical definition.
🚨 National economic alert
Spain’s Independent Fiscal Responsibility Authority AIREF has said it forecasts a recession in Spain in 2023. You will not see this in the 115 pages of the new report or in the 46 pages of graphs and notes in the pdf presentation. To find them admitting to it, you will have to scroll through almost three hours of YouTube. Or call them for confirmation.
“We haven’t said there is going to be an imminent recession”, an AIREF spokeswoman told me this morning, but a “technical recession”. But you are forecasting decreasing growth for two consecutive quarters? “Yes”. When? At the start of 2023. Which is quite imminent in economic terms.
The Economy Minister, Nadia Calviño (PSOE) is denying it’s an issue.
💰 How much..?
The AIREF forecasts Spanish GDP will fall by 0.2% or 0.3% in the next two quarters. The oral replies clash with the 2023 growth forecast in the AIREF’s own new written report, which reads: “for the year 2023, PIB growth in terms of volume is forecast to be around 1.5%”. Unless they expect the economy to now go into recession and then suddenly turn around again next spring.
🔥 Who wants a recession anyway…?
“The economic indicators do not suggest a technical recession” — (Nadia Calviño, Economy Minister)
“Does a technical recession mean there is a recession? Well, really, we, there, well, we have our doubts, don’t we?” — (AIREF manager)
“Really, for me, defining a technical recession because two consecutive quarters fall, well, come on […] it’s true that is the definition used for recessions but not by all organisations. There are US organisations that take into account a broader set of indicators.” — (AIREF manager)
“The absence of structural changes in the government’s economic policy […] and their abuse in implementing short-term, indiscriminate support measures with high impact on public spending have accelerated the rate of general slowdown in Spain seen by other European Union countries, even from before the start of the war in Ukraine.” — (El Mundo)
📉 The slippery Spanish slope…
In July, Calviño lowered the GDP growth forecast for Spain in 2023 from 3.5% to 2.7%. Hours later, the IMF said it would be 2%.
At the start of October, Caliviño said it would be 2.1%. Hours later, the Bank of Spain said 1.4% and then the IMF said 1.2% and BBVA Research went for 1%.
😱 3.5% > 2.7% > 2.1% > 2% > 1.4% > 1.2% > 1% > recession
This new admission from the AIREF is the first time one of the more serious economic organisations has forecast—even if it was only in response to journalist’s oral questions—a recession in Spain for 2023.
⚔️ The political battle
The Popular Party has today asked the government to withdraw the entire 2023 budget. “It has been absolutely discredited by everyone”, said PP parliamentary spokeswoman Cuca Gamarra.
Parliament began debating the 2023 budget this morning and will continue tomorrow before the vote. Parties have tabled 61 pages of amendments.
🌱🌱 Remember the green shoots…
(Even more) economic gloom is on the horizon again worldwide. Spain once again has a socialist government, this time with a communist element in coalition. Again, a socialist Economy Minister is denying a negative reality. More or less at the beginning of the other global economic crisis, in 2009, the other socialist Economy Minister, Elena Salgado, said: “In a few weeks, we will see green shoots”. It would be another four years before Spain saw peak unemployment. They even made a video with nice music: Green shoots. Socialism and optimism. Recipes for getting out of the crisis.
Subscribe now to:
🔎 Understand the stories changing Spain today better
🎯 Get all of the daily articles and analysis columns
💪 Guarantee the independence of this unique reporting