SPANISH MACROECONOMIC PROJECTIONS: 2021-2023 ÓSCAR ARCE Director General Economics, Statistics and Research - Banco de ...
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SPANISH MACROECONOMIC PROJECTIONS: 2021-2023 ÓSCAR ARCE Director General Economics, Statistics and Research Madrid 23 March 2021 DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA
CONTENTS
1. Overview
2. Economic activity in the short term
3. Scenarios for the Spanish economy in the 2021-2023 period
•Narrative
•Macroeconomic projections
4. Risks
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 2CONTENTS
1. Overview
2. Economic activity in the short term
3. Scenarios for the Spanish economy in the 2021-2023 period
- Narrative
- Macroeconomic projections
4. Risks
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 3THE PANDEMIC CONTINUES TO INFLUENCE ACTIVITY IN THE SHORT TERM. CONSUMPTION, TOURISM
AND THE NGEU WILL BE KEY IN THE MEDIUM TERM
Recent developments
• Slowdown in activity in 2020 Q4, though a positive surprise compared with the BdE December baseline scenario.
• Unfavourable performance in 2021 Q1, especially in services. Signs of some pick-up as the quarter unfolds.
Macroeconomic projections: 2021-2023
• Three projection scenarios set out to reflect high uncertainty.
• Compared with the December projections, growth in the first half of 2021 has been revised slightly downwards.
More sluggish start to the year and part of the previously envisaged positive impact of the NGEU for 2021 passed on to 2022.
• No significant change in the medium term outlook for output.
• The alternative scenarios differ as to the course of private consumption and tourism.
Inflation
• The rise in inflation in 2021 is forecast to be temporary, influenced by climbing commodities prices, which do not entail significant
changes in the medium-term inflation scenario.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 4CONTENTS
1. Overview
2. Economic activity in the short term
3. Scenarios for the Spanish economy in the 2021-2023 period
•Narrative
•Macroeconomic projections
4. Risks
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 5SLOWDOWN IN ACTIVITY IN Q4, BUT POSITIVE GROWTH
GDP GROWTH IN 2020
QUARTER-ON-QUARTER GROWTH OF GDP (%) AND CONTRIBUTIONS (pp)
QNA Q4
DECEMBER PROJECTION: BASELINE SCENARIO 0%
DECEMBER PROJECTION: MILD SCENARIO
0,9 -2%
0,6
0,4
0,5
-4%
-0,5 -5,3%
-0,5 -6%
-0,8
-6,8%
-1,5
-8%
-8,2%
-2,5 -8,9%
-10%
-9,9%
-3,5 -11,0%
-12%
GDP National demand Net external demand FRANCE SPAIN ITALY UNITED EURO AREA GERMANY
KINGDOM
SOURCES: Banco de España, INE and Eurostat.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 6A FURTHER DIP IS FORESEEN IN Q1, ALBEIT WITH A GRADUAL IMPROVEMENT AS THE QUARTER
UNFOLDS
Indicators of: Key factors
consumption Fall-off in mobility and activity
at the start of the year; signs of
incipient recovery
employment
Signs of more pronounced
worsening in the labour market
mobility
spending Improved economic growth
outlook globally and in the euro
area
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 7UNFAVOURABLE DEVELOPMENTS AT THE START OF Q1, WITH DECLINES IN CONSUMPTION AND
EMPLOYMENT
NEW CAR REGISTRATIONS. TOTAL SOCIAL SECURITY REGISTRATIONS, FURLOUGH SCHEMES AND
Growth and contributions EFFECTIVE SOCIAL SECURITY REGISTRATIONS
% y-o-y and pp
40 % y-o-y
5,0
20
0,0
0
-20 -5,0
-40 -10,0
-60
-15,0
-80
-20,0
-100
-25,0
-120
INDIVIDUALS RENTAL COMPANIES NON-RENTAL COMPANIES TOTAL TOTAL SOC.SEC. FURLOUGH SCHEMES EFFECTIVE SOC.SEC.
REGISTRATIONS REGISTRATIONS
SOURCES: ANFAC, Ministerio de Trabajo, Migraciones y Seguridad Social and Banco de España. Latest observation: February 2021.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 8AFTER POSTING DECLINES AT THE START OF THE YEAR, THE HIGH-FREQUENCY MOBILITY
INDICATORS POINT TO A RECOVERY IN RECENT WEEKS
GOOGLE MOBILITY INDICATOR PETROL AND DIESEL SALES
(average of recreation, workplace and transit station indicators)
% y-o-y
Percentage deviation from reference period (a) 20%
0 0%
-20 -20%
-40%
-40
-60%
-60
-80%
-80
-100%
12/03/2020
27/03/2020
11/04/2020
26/04/2020
11/05/2020
26/05/2020
10/06/2020
25/06/2020
10/07/2020
25/07/2020
09/08/2020
24/08/2020
08/09/2020
23/09/2020
08/10/2020
23/10/2020
07/11/2020
22/11/2020
07/12/2020
22/12/2020
06/01/2021
21/01/2021
05/02/2021
20/02/2021
07/03/2021
-100
04-Sep
19-Sep
22-Feb
08-Mar
23-Mar
07-Apr
22-Apr
01-Feb
16-Feb
06-Jun
21-Jun
06-Jul
21-Jul
05-Aug
20-Aug
03-Mar
07-May
22-May
03-Dec
18-Dec
04-Oct
19-Oct
03-Nov
18-Nov
02-Jan
17-Jan
FOUR-DAY MOVING SUM
SPAIN
SOURCES: Google, Dirección de Estudios de Repsol and Banco de España. Last observations: 16 March (mobility) and 21 March (fuel).
a) Percentage deviation from the mobility observed in a pre-pandemic reference period (3 January-6 February 2020). 7-day moving averages are depicted.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 9CONTENTS
1. Overview
2. Economic activity in the short term
3. Scenarios for the Spanish economy in the 2021-2023 period
•Narrative
•Macroeconomic projections
4. Risks
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 10SIGNIFICANT FACTORS OF UNCERTAINTY PERSIST, ADVISING THE FORMULATION OF THREE
FORECASTING SCENARIOS
FIRST HALF OF 2021 2021-2023 HORIZON
Course of the pandemic and of
Roll-out of the NGEU programme
vaccination in the short term
Restrictions on mobility and Developments in private
activity consumption and the saving rate
Path of recovery of international
Agents' adaptability
tourism
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 11BUSINESS EXPECTATIONS CORROBORATE A MORE UNFAVOURABLE THAN EXPECTED PERFORMANCE
IN Q1
QUARTERLY CHANGES IN TURNOVER (a) QUARTERLY CHANGES IN EMPLOYMENT (a)
0,10
0,10
0,00 0,00
-0,10 -0,10
-0,20 -0,20
-0,30 -0,30
-0,40 -0,40
-0,50 -0,50
Q4 Q1(e) Q1 Q2(e) Q4 Q1(e) Q1 Q2(e)
November 2020 wave February 2021 wave
SOURCE: EBAE (Banco de España Survey on Business Activity).
a) Expected change (e) compared with the previous quarter. Index calculated as follows: Significant decline=-2; Slight decline=-1; Stability=0; Slight increase=1; Significant increase=2
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 12THE LATEST FORECASTS INCLUDE SOME IMPROVEMENT IN THE EXTERNAL ENVIRONMENT
GLOBAL GDP GROWTH FORECASTS EURO AREA GDP GROWTH FORECASTS
- 2021 - 2021
annual % annual %
7,0 7,0
6,5 6,5
6,0 6,0
5,5 5,5
5,0 5,0
4,5 4,5
4,0 4,0
3,5 3,5
3,0 3,0
JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2020 2021 2020 2021
CONSENSUS OECD IMF
SOURCES: Consensus Forecast, OECD and IMF.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 13GROWTH FORECASTS FOR 2021 Q1
QUARTER-ON-QUARTER GDP GROWTH (%)
0,5
0,4
0,4 0,4
0,3
0,2
0,1
0,0
-0,1
-0,2
-0,3
-0,3
-0,4
-0,4
-0,5
2020 Q4 MILD BASELINE SEVERE
2021 Q1
2020 Q4 MILD BASELINE SEVERE
SOURCES: Banco de España and INE.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 14MACROECONOMIC PROJECTIONS: 2021-2023
MARCH 2021 PROJECTIONS (a)
ALTERNATIVE SCENARIOS
BASELINE SCENARIO
MILD SEVERE
Annual rate of change (%) unless otherwise indicated
2020 2021 2022 2023 2021 2022 2023 2021 2022 2023
GDP -11.0 6.0 5.3 1.7 7.5 5.5 1.6 3.2 4.6 2.2
Harmonised index of consumer prices (HICP) -0.3 1.4 0.8 1.2 1.4 0.9 1.3 1.3 0.6 1.0
HICP excluding energy and food 0.5 0.5 1.0 1.1 0.6 1.1 1.3 0.4 0.7 0.9
Unemployment rate (% of labour force). Annual average 15.5 17.0 15.1 14.1 15.9 13.9 12.8 18.3 17.2 16.1
General government lending (+) / borrowing (-) (% of GDP) -10.5 -7.7 -4.8 -4.4 -6.8 -3.9 -3.4 -9.1 -6.5 -5.8
General government debt (% of GDP) 117.1 117.9 116.4 117.6 115.4 112.7 112.8 122.6 123.6 125.5
SOURCES: Banco de España and INE.
a) Cut-off date for the projections: 16 March 2021.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 15OUTLOOK FOR GRADUAL RECOVERY IN OUTPUT
GROSS DOMESTIC PRODUCT
(chained volume index)
2019 Q4 = 100
105
100
95 M ARCH 2021 DE CE M BE R 2020
P RO JE CT IO NS P RO JE CT IO NS
90 2021 2022 2023 2021 2022 2023
G DP 6.0 5.3 1.7 6.8 4.2 1.7
85
Harm on ised in d ex of
1.4 0.8 1.2 0.6 1.2 1.3
con su m er p rices ( HICP )
80
75
2019 Q4 2020 Q4 2021 Q4 2022 Q4 2023 Q4
DECEMBER 2020. BASELINE SCENARIO MARCH 2021. BASELINE SCENARIO
MARCH 2021. MILD SCENARIO MARCH 2021. SEVERE SCENARIO
SOURCES: Banco de España and INE.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 16SAVINGS BUILT UP DURING THE PANDEMIC WILL HELP THE RECOVERY IN PRIVATE CONSUMPTION
EMPLOYMENT IN THE SECTORS HARDEST HIT BY THE PANDEMIC (% of total
DETERMINANTS OF THE INCREASE IN HOUSEHOLD SAVING. employment)
Cumulative increase between 2020 Q1 and Q3 relative to the same period of 2019 AND SPENDING ON ITEMS MOST AFFECTED BY THE PANDEMIC (% of total spending)
Breakdown by income quartile
% of total employees in the quartile or of total consumption in the quartile
% of 2019 GDP
4,0 40
3,5 35
3,0 30
2,5
25
2,0
20
1,5
15
1,0
10
0,5
5
0,0
EURO AREA SPAIN 0
1 2 3 4
Income quartile
FORCED PRECAUTIONARY OTHER INCREASE IN HOUSEHOLD SAVING
HOUSEHOLD SPENDING (a) EMPLOYMENT (b)
SOURCES: INE, Eurostat and Banco de España.
a. Share of spending on items most affected by the pandemic by households with income in a certain income quartile as a percentage of total spending by households in that income quartile.
b. Share of employees in the sectors hardest hit by the pandemic residing in a household with income in a certain income quartile as a percentage of total households in that income quartile.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 17HIGH LEVEL OF UNCERTAINTY SURROUNDING THE PATH OF THE RECOVERY IN
CONSUMPTION AND SURROUNDING THE SAVING RATE
PRIVATE CONSUMPTION SAVING RATE
2019 Q4 = 100 % of GDI
105 18
100 16
95 14
90 12
85 10
80 8
75 6
70 4
2019 Q4 2020 Q4 2021 Q4 2022 Q4 2023 Q4 2019 2020 2021 2022 2023
110
60
MILD SCENARIO BASELINE SCENARIO SEVERE SCENARIO
2019 Q4 2020 Q4 2021 Q4 2022 Q4 2023 Q4
SOURCES: Banco de España and INE.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 18THE PATH OF THE RECOVERY IN INTERNATIONAL TOURISM IS PARTIALLY CONTINGENT ON THE
COMING SUMMER SEASON
TOURISM EXPORTS TOURISM EXPORTS
2019 Q4 = 100 % relative to 2019 Q3 level
120 120%
100 100%
80 80%
60 60%
40 40%
20 20%
0 0%
2019 Q4 2020 Q4 2021 Q4 2022 Q4 2023 Q4 2020 Q3 2021 Q3 2022 Q3 2023 Q3
MILD SCENARIO BASELINE SCENARIO SEVERE SCENARIO
SOURCES: Banco de España and INE.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 19INFLATION WILL HOLD AT MODERATE LEVELS IN THE MEDIUM TERM
HEADLINE HICP HICP EXCLUDING FOOD AND ENERGY
% y-o-y % y-o-y
2,0 2,0
1,5 1,5
1,0 1,0
0,5 0,5
0,0 0,0
-0,5 -0,5
-1,0 -1,0
2019 2020 2021 2022 2023 2019 2020 2021 2022 2023
5,0
0,0
-5,0
2…
2…
2…
2…
2…
DECEMBER 2020 MARCH 2021. BASELINE SCENARIO
SOURCES: Banco de España and INE.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 20CONTENTS
1. Overview
2. Economic activity in the short term
3. Scenarios for the Spanish economy in the 2021-2023 period
•Narrative
•Macroeconomic projections
4. Risks
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 21RISKS TO THE PROJECTIONS
Economic activity
• Related to the course of the pandemic:
• Potential fresh outbreaks of the pandemic, which would entail containment measures with a greater
impact on the “social sectors”.
• The roll-out of a medical solution will shape the path of the recovery in the medium term.
• Uncertainty surrounding the impact of NGEU.
• Scale of the process to adapt to the new environment and agents’ speed in doing so.
• Possible adverse developments in the private sector’s financing conditions.
• Persistence of the effects of the crisis on the labour market and productive capacity (elements of hysteresis in
unemployment, structural changes, potential growth, business vulnerability).
• New package of support measures in Spain.
• Fiscal package in the United States.
Prices
• Materialisation of downside risks to activity.
• Inflationary pressures associated with rising commodity prices.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 22THANK YOU FOR YOUR ATTENTION DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA
ANNEX DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 24
ASSUMPTIONS ABOUT THE INTERNATIONAL ENVIRONMENT AND THE MONETARY
AND FINANCING CONDITIONS
Difference between the current
March 2021 projections and those under the
projections (a) December 2020 baseline
Annual rate of change unless otherwise indicated scenario (b)
2020 2021 2022 2023 2021 2022 2023
International environment
Spain's export markets (c) -11.3 7.7 5.4 3.2 0.8 0.1 -0.3
Oil price in US dollar/barrel (level) 42.3 59.3 55.7 53.7 15.3 10.1 6.7
Monetary and financing conditions
USD/EUR exchange rate (level) 1.14 1.21 1.21 1.21 0.02 0.02 0.02
Nominal effective exchange rate against non-euro area (d)
117.8 122.5 122.4 122.4 1.5 1.5 1.5
(2000 = 100)
Short-term interest rates (3-month EURIBOR) (e) -0.4 -0.5 -0.5 -0.4 0.0 0.0 0.1
Long-term interest rate (10-year bond yield) (e) 0.4 0.4 0.6 0.8 0.2 0.3 0.3
SOURCES: ECB and Banco de España.
a. Cut-off date for the assumptions: 16 March 2021. The figures in levels are annual averages and the figures in rates are calculated on the basis of the corresponding annual averages.
b. The differences are in rates for export markets, in levels for the oil price and the USD/EUR exchange rate, in percentages for the nominal effective exchange rate and in percentage points for the interest rates.
c. Assumptions about the behaviour of Spain’s export markets presented in the table are drawn from the March 2021 ECB staff macroeconomic projections for the euro area.
d. A positive percentage change in the nominal effective exchange rate reflects an appreciation of the euro.
e. For the projection period, the values in the table constitute technical assumptions prepared using the Eurosystem’s methodology. These assumptions are based on prices traded on the futures markets or their proxies, and should not be
interpreted as a Eurosystem prediction as to the course of these variables.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 25MACROECONOMIC PROJECTIONS: 2021-2023
Tasas de variación anual
March 2021 and December 2020 projections
Harmonised index of HICP excluding food and Unemployment rate (% of
GDP
consumer prices (HICP) energy labour force) (b)
Annual rates of change, %
2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023
MARCH 2021 (a)
MILD SCENARIO -11.0 7.5 5.5 1.6 -0.3 1.4 0.9 1.3 0.5 0.6 1.1 1.3 15.5 15.9 13.9 12.8
BASELINE SCENARIO -11.0 6.0 5.3 1.7 -0.3 1.4 0.8 1.2 0.5 0.5 1.0 1.1 15.5 17.0 15.1 14.1
SEVERE SCENARIO -11.0 3.2 4.6 2.2 -0.3 1.3 0.6 1.0 0.5 0.4 0.7 0.9 15.5 18.3 17.2 16.1
DECEMBER 2020
MILD SCENARIO -10.7 8.6 4.8 1.9 -0.3 0.7 1.3 1.4 0.5 0.6 1.1 1.3 15.7 17.1 14.0 12.4
BASELINE SCENARIO -11.1 6.8 4.2 1.7 -0.3 0.6 1.2 1.3 0.5 0.5 0.9 1.1 15.8 18.3 15.6 14.3
SEVERE SCENARIO -11.6 4.2 3.9 1.5 -0.3 0.5 0.9 1.1 0.5 0.2 0.6 0.8 16.2 20.5 18.1 17.6
SOURCES: Banco de España and INE.
a. Cut-off date for the projections: 16 March 2021.
b. Annual average.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 26MACROECONOMIC PROJECTIONS: 2021-2023
MARCH 2021 PROJECTIONS (a)
Annual rate of change in volume terms and % of GDP BASELINE SCENARIO
2020 2021 2022 2023
GDP -11.0 6.0 5.3 1.7
Private consumption -12.4 8.8 4.8 1.1
Government consumption 4.5 1.4 -0.4 1.7
Gross fixed capital formation -12.4 7.1 9.5 1.5
Exports of goods and services -20.9 11.1 8.2 5.3
Imports of goods and services -16.8 12.4 7.2 4.5
National demand (contribution to growth) -9.1 6.2 4.9 1.4
Net external demand (contribution to growth) -1.9 -0.2 0.4 0.3
Nominal GDP -10.0 7.0 6.6 3.1
GDP deflator 1.1 0.9 1.2 1.4
Harmonised index of consumer prices (HICP) -0.3 1.4 0.8 1.2
HICP excluding energy and food 0.5 0.5 1.0 1.1
Employment (hours) -10.4 7.5 5.0 1.7
Unemployment rate (% of labour force). Annual average 15.5 17.0 15.1 14.1
Net lending (+)/net borrowing (-) of the nation (% of GDP) 1.4 1.9 3.0 2.8
General government net lending (+)/net borrowing (-) (% of GDP) -10.5 -7.7 -4.8 -4.4
General government debt (% of GDP) 117.1 117.9 116.4 117.6
SOURCES: Banco de España and INE.
a. Cut-off date for the projections: 16 March 2021.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 27THE UNITED STATES: FISCAL MEASURES TO ALLEVIATE THE EFFECTS OF THE
PANDEMIC
• Two fiscal packages, one approved in December and another announced in January, temporarily and sequentially extend various business
and household support measures expiring this year.
• Overall, the packages would increase GDP by 5% in the United States in 2021 and have positive effects on the rest of the world.
EFFECTS ON THE GDP OF THE USA AND OF OTHER ECONOMIES
Deviation (%) from scenario without fiscal stimulus
6
5
4
3
2
1
0
USA Euro area World USA Euro area World
(excl. USA) (excl. USA)
2021 2022
PACKAGE APPROVED IN DECEMBER 2020 JANUARY 2021 PROPOSAL TOTAL
SOURCES: Banco de España drawing on the Congressional Budget Office, Committee for a Responsible Federal Budget, Tax Policy Center and simulations using the NiGEM model.
DIRECTORATE GENERAL ECONOMICS, STATISTICS AND RESEARCH – BANCO DE ESPAÑA 28You can also read
