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Letter from Spain: Is Spain Doing Well?

By SEC Newgate team
30 November 2021

By Elena Gallego (SEC Newgate Spain)

The answer to this question could generate more than one economic debate among experts, beyond a brief YES or NO.

With the Government highlighting the good pace of recovery for the Spanish economy and the opposition showing a very pessimistic alternative scenario, really knowing how the economy of Spain is doing is an arduous task.

President Pedro Sánchez, has flexed his muscles in Parliament, talking about the good employment data and the economic recovery, in which he mentioned, "Spain is already immersed." Adding that "this recovery is being solid and fast thanks to the social democratic measures adopted by this Government" and predicting "a better Christmas than the past" relying on the high vaccination rate against COVID-19.

However, this data contrasts with the opinion of the Bank of Spain, which has revised downward the GDP forecasts for this year and has described the Budget for 2022 too optimistic.

This has been anticipated by the Governor of the financial entity, Pablo Hernández de Cos, noting that the Bank of Spain will make a "significant downward revision" of its estimates of economic growth in Spain for this year.

What is the real situation? Who should the citizen believe? Or, more markedly: Who is lying?

Perhaps the best way to draw a conclusion that is as objective as possible, is to take a look at the country's industrial landscape, as well as other areas that can act as a social barometer.

According to a recent report prepared by COGITI (General Council of Industrial Technical Engineering of Spain), which shows an economic perspective of the current situation of the industry in Spain: the majority response, although by a very small margin, corresponds to the intermediate scale, at 42.84%. However, 51.8% consider it to be bad or very bad (42.34% and 9.46% respectively), compared to 5.36% who think it is good or very good (5.27% and 0, 09%).

On the other hand, the wave of protests in the streets predicts a hot winter and clouds the recovery.

Among the sectors that have called protest actions are road hauliers (complaining about the rise in diesel); farmers and breeders (taking to the streets due to the unacceptable rise in production costs); the metal sector (demanding improvements in the agreements taking into account inflation); the automobile sector (burdened by the high cost of electricity and the recent lack of supplies); and pensioners (demanding the revaluation of pensions based on the rise in the CPI).

However, not everything is so disappointing.

According to health journal The Lancet, Spain registers better coronavirus data than the rest of its European neighbors and could be close to achieving the long-awaited group immunity, despite the latest spikes in the number of infections.

Good news that helps to give a certain normality, despite the restrictions that are looming on the horizon, and makes the sectors mentioned above glimpse some hope of recovery and compliance with their demands.

So… is Spain doing well?

Like everything in life, according to the glass and the political tendency with which the forecasts are viewed, although quoting the pedagogue Lawrence J. Peter (known for having formulated the famous Peter Principle): “Definition of an economist: he is an expert who tomorrow will know how to explain why the things he predicted yesterday did not happen today ”….