The government had warned of the distortion between weak GDP versus employment or collection, and is still waiting for the CPI to take out free electricity contracts to adjust the basket
The INE (National Statistical Institute)’s first blow to the government’s forecasts came after the summer of last year. So, with much of the population vaccinated against the coronavirus and tourism already pushing, the agency threw cold water on revising Spain’s economic growth to 1.1% in the second quarter. of 2021, compared to 2.8% initially estimated. The final statistics implied that Spain would not grow as much in 2021. And it forced the vice president, Nadia Calviño, to intervene. He then spoke of being “cautious” in light of this data from the INE, advocating an “intense recovery regardless of the volatility of the indicators in an anomalous environment due to the pandemic.”
That was the origin of the controversies that have surrounded the INE in recent months, leading to the resignation of its chairman, Juan Manuel Rodríguez Poo, for personal reasons. His resignation was scheduled for the coming weeks, as confirmed by sources from the Ministry of Economy, where they describe this move as a “strengthening” of the institution and exclude interference: “There has been no pressure here and there has been recognition of the work,” these sources indicate.
However, the trail of statistics that the INE has updated in recent months has continued to worry Calviño’s team. In the case of the INE, it was already shielded at the time by the difficulty of making approximations of economic evolution in a period as fractious as that of the last months of 2021. He went on to explain that “the inherent difficulty must be kept in mind be taken into account when measuring the situation we have been facing since the first quarter of 2020. It is a period of major and rapid changes in the short-term evolution of economic activity which, both because of its origin and its magnitude, pose an unprecedented statistical challenge In addition, the agency clarifies that it has also revised all statistical series of the economy since the first quarter of 2018.
From Economics, they compared the weak GDP data with labor market statistics and budget execution. Calviño has at times scorned GDP itself, indicating that the Spanish economy is “very positive” and the recovery is “solid” and reaching “where it matters”: employment, “which has accumulated nine months of growth”. It is backed by 20 million backers and a deficit that fell from 7% in 2021 to ensure Spain didn’t come out of the crisis as badly as the INE checked each quarter.
The agency’s successive GDP statistics have only confirmed that the Spanish economy has not grown as strongly as initially expected. It closed 2021 with a 5.1% increase, far from the 7% projected by the Executive. And in the first quarter of this year, a pyrrhic 0.2% did, conditioned by the latest blows from the coronavirus, the start of the war in Ukraine, the carrier strike in March and unstoppable inflation.
And there is exactly the other stumbling block that has created friction between the Economy and the INE. With the CPI (Consumer Price Index) record set for March (9.8% year-on-year, a three-decade high), Nadia Calviño insisted that the institution’s work should cover the millions of electricity contracts in force in the free market, and not just the prices of the regulated market (about 10 million contracts), much more volatile and expensive in the past year, driving inflation up even more.
It’s not technically easy. So much so that the INE wanted to include these free-market contracts in its official inflation data last January. And six months later, still not. Then “it was not possible”, sources of the institution indicate. “Until the methodological problems are resolved, we cannot give a date” to include this data and adjust inflation to the economic reality itself: prices will continue to rise, but by including free contracts (usually with fixed and stable rates), inflation data will change. In principle, it could be more moderate than the current one. Though energy sector sources make it clear that there are doubts about this potential moderation, as free contracts tend to be more expensive – and more stable – and the latest revisions have always been higher in their prices and economic conditions.
Calviño himself announced in early May that there is “an electricity company” that did not cooperate with the INE to provide the necessary data to help include the price of electricity on the free market in the monthly calculation of inflation.
The latest discrepancy came this weekend, with the adoption of the anti-crisis plan. Calviño boasted yesterday that the measures approved by the government to mitigate the impact of the war in Ukraine on prices are “reducing inflation by 2 to 3 points”. “From the government, we have taken measures that have been effective, they are cutting inflation by 2 to 3 points, they are bringing inflation in Spain below the European Union average, there are 11 countries in the eurozone with inflation rates higher than that. of Spain,” he stated during his speech at the Senate scrutiny session.
This means that, according to his calculations, if the Executive had not approved measures such as tax cuts on electricity, the CPI would have increased by 11.7% in May, not by 8.7% as certified by the INE. However, this institute publishes monthly the CPI at constant taxes, which exactly reflects the behavior that inflation would have had without measures, and has increased by 9.6% in May, that is, the measures applied have mitigated the increase in prices in nine tenths.
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.
