The government is confident that European funds will contribute around €2,000 million a month to the economy, but the Bank of Spain is more pessimistic
The government is confident that European funds will be the driving force for the Spanish economy next year. A year in which, while growth of 2.1% is expected – well below 4.4% of this – the European economic slowdown will be the common denominator of the major powers. But Spain will be the fastest growing of the major euro countries, thanks in large part to the arrival of billions from Europe.
The government is so confident that these funds will – finally – kick the accelerator and run at “cruising speed” in projects across all sectors that its GDP growth forecasts for 2023 are quite different from those of national economic organizations and international ones. The Bank of Spain, the tax authorities (Airef), the OECD and even the International Monetary Fund (IMF) itself estimate that our country will make between 1% and 1.5% next year, which means a considerable difference.
Much of this gap is due to the lack of confidence organizations have for the time being that European funds will really begin to materialize. The Director of Statistics at the Bank of Spain, Ángel Gavilán, explained during the presentation of the organization’s latest report that the Spanish economy will experience a “slowdown” until the spring of 2023, when this will be the time when the activity is recovering a “growing force. Therefore, the pre-pandemic GDP recovery is being postponed until the first quarter of 2024, the year when the country is calculated to increase by 2.9%, while European funds are already fully in the economy are installed.
On the other hand, they allude from the Ministry of Economic Affairs to a more ‘cyclical’ path in the incorporation of funds from Europe. So much so that the first quarter of the year will be very positive for the economy and all subsequent ones will be based on it.
According to the figures included in the General Budgets, EU funds will contribute 2.8 points to GDP in 2023, which amounts to EUR 25,156 million. According to the experts, the question is whether all the resources made available by Brussels will materialize in concrete projects that have been implemented. The “cruising speed” referred to by the government will be 2,000 million per month. But the Bank of Spain is not so optimistic about this rate. Gavilán warned that the funds are developing a “backlog” than they themselves predicted in their previous June report, in which they estimated the funds reaching the economy this year would be 20,000, and now they are forecasting 12,000.
In 2021, the agency predicted that the funds for that year would have an impact of about one percentage point on GDP growth. But the most recent information has reduced that impact to about 0.2 points. For 2022, the Bank of Spain predicts an impact of 1.4 points, which has now been reduced to 1 point. And for next year they leave it at 0.6 points. If the implementation of the projects is faster or slower, this has “relevant” effects on the growth and inflation projection of the organization. For this reason, Gavilán has requested that since the implementation deadlines are “limited” to the end of 2023, it would be useful to “ease” the management of these funds.
The Tax and Customs Administration does not agree with the government on this either. Their calculations predict that the funds will have a smaller impact on economic growth. The Executive’s estimates suggest that the funds will increase the level of GDP by 2.8 points in 2023, but Airef thinks it will only be 2 points.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
