PwC Economic Consensus lowers its growth forecast for the Spanish economy in 2022 from 4.3% to 4% and warns of shifting costs to the payroll chain
The expected pick-up in economic activity for this summer thanks to the pull of tourism could just be a mirage that would put a hard brake on from September. There are growing voices pointing to the dreaded “hot autumn” for which the PwC Economic Consensus has decided to cut the Spanish economy’s growth forecast from 4.3% to 4%, below the 4.3% projected, also by the government .
The company has prepared this quarterly overview of the situation since 1999 by a panel of more than 450 experts, businessmen and managers who estimate a growth of 3% by 2023, in this case already a significant drop of almost nine-tenths compared to the previous year. edition.
In its analysis of the results of the study, PwC confirms that the consequences of the war in Ukraine “are likely to take a heavy toll on growth”. “The increase in energy prices, with the associated risk of being passed on to the rest of the economy and to wages, poses a challenge to economic activity, employment and corporate competitiveness,” they add.
It is true that the experts’ forecast for this summer quarter is pointing towards mild optimism. But perception changes significantly when respondents are asked to rate the economic situation in a year. There, the majority forecast is that the situation will deteriorate significantly. Up to 46% of them endorse that idea.
The results of the survey confirm that the major problem facing the Spanish economy is inflation. In one quarter, the experts’ estimate of this reference rose by two points at the end of the year, from 4.69% to 6.64%. And from PwC, they warn that this latest forecast is likely to fall short “if we take into account that it was made without knowing the preliminary data for June,” with the CPI rising historically to 10.2%, taking underlying inflation as well. was caused by 5.5% in the period.
One of the major problems arising from this inflationary environment is the price hike companies are already undertaking to cover some of the increase in costs without completely destroying their margins. And here the panorama that the surveyed managers expect is not very encouraging for consumers. Specifically, 63.7% of the experts are committed to further increasing prices in the coming months. This is the highest percentage of the entire historical series of the research.
“The response of the majority, how could it be otherwise, is that the main driver is the increase in non-salary costs, essentially those related to energy,” they say from PwC. Two out of three respondents explain it this way. But it’s also telling that the percentage of those relating the increase to salary costs has doubled (from 13% to 26%).
“This could be a serious indication of the transfer of price and cost increases to the payroll, increasing the likelihood of second-round effects, or at least it’s a sign of fear that this dangerous indirect impact could be achieved” , they say. warn.
This situation has exacerbated pessimism about growth forecasts, also based on “a deterioration in the financial situation of households and a decline, over the next six months, in both consumption and housing demand”, according to 43.5% and 39.1. % of respondents, respectively”, due to inflation and lower real disposable income.
Faced with this situation, and with government accounts still affected by significant imbalances, three in four respondents argue that the government needs to prepare a medium- and long-term fiscal consolidation plan.
Of the other options, lowering taxes is the least attractive for all citizens. Only 23% agree with pursuing this policy as a solution to the impact of the crisis on families. On the other hand, they place more value on maintaining current taxes and taking advantage of the extra collection generated by inflation to reduce government debt and deficit.
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.
