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    AIReF English

    “Our mission is to guarantee effective compliance of the financial sustainability principle by the General Goverment”

    AIReF endorses the government’s macroeconomic scenario, but warns of downside risks due to the economic context

    Aval previsiones macro 2022

    • The Independent Authority for Fiscal Responsibility considers the scenario put forward by the Government, which forecasts a 4.3% rise in GDP in 2022, to be feasible
    • This scenario is in line with AIReF’s latest forecasts and is prudent with respect to the most recent forecasts by the consensus and some national and international institutions
    • AIReF also considers the gradual moderation of growth projected by the Government in the medium term, with GDP rises of 3.5% in 2023, 2.4% in 2024 and 1.8% in 2025, to be feasible
    • The institution warns that the balance of risks is skewed downwards, especially in the short term, due to the war in Ukraine, COVID-19 and the risk of intensifying inflationary tensions
    • AIReF notes that the Government’s macroeconomic scenario does not provide details of the macroeconomic impact of the RTRP and it recommends that efforts be made to increase transparency and offer more information on execution of the Plan.
    • In the coming weeks, AIReF will publish the Report on the Stability Programme, which will provide a comprehensive assessment of the SPU.

    The Independent Authority for Fiscal Responsibility (AIReF) today published on its website the endorsement of the macroeconomic forecasts that will accompany the Stability Programme Update for the years 2022 to 2025. AIReF considers the scenario put forward by the Government, which is also in line with the institution’s latest forecasts and prudent with respect to those of other national and international institutions, to be feasible. However, it warns that in the current context downside risks predominate, especially in the short term. In the coming weeks, AIReF will publish the Report on the SPU, which will provide details of AIReF’s projections and an assessment of the Government’s forecasts.

    In the report, AIReF indicates that the Government’s macroeconomic scenario for the period 2022-2025 is in the central range of the confidence bands estimated by AIReF on the basis of its own scenarios, both at constant and current prices. However, the energy crisis, the supply problems in production chains that have been observed since mid-2021 and the persistence of the pandemic project extreme uncertainty on the economy, which has intensified with the outbreak of the war in Ukraine.

    For 2022, the SPU scenario assumes GDP growth in volume terms of 4.3%, almost three percentage points lower than the 7% growth with which the General State Budget for 2022 was drawn up. This growth is in line with AIReF’s most recent estimates, published on April 7th in the Report on the Initial Budgets of the General Government. In addition, it is prudent in relation to the most recent forecasts made by other public and private institutions.

    AIReF considers that these downward revisions are justified by the energy crisis and the shortage of intermediate inputs observed since 2021, which, exacerbated by the invasion of Ukraine, have ended up leading to a scenario of lower growth and high and persistent inflation.

    In the medium term (2023-2025), the Government forecasts gradual moderation of GDP growth as the boost associated with the pent-up demand accumulated during the pandemic and the Recovery, Transformation and Resilience Plan (RTRP) is diluted. Specifically, the Government forecasts GDP growth of 3.5% in 2023, 2.4% in 2024 and 1.8% in 2025. The three years are in the central range of AIReF’s probability bands. This scenario of convergence at real growth rates close to the potential growth of the economy is also considered feasible.

    As regards prices, the growth forecast for the implicit GDP deflator is considered plausible throughout the forecast horizon. The Government’s forecasts suggest a sharp increase in the GDP deflator in 2022 and a certain degree of persistence in 2023, with rates of 4% and 2.4%, respectively, followed by moderation. These rates are in the central probability range estimated by AIReF based on its own scenarios. The forecasts of nominal GDP growth are therefore considered feasible as they are in the central range of the bands calculated by AIReF. The Government puts forward a scenario of nominal GDP growth that would reach 8.5% in 2022, which, according to AIReF’s estimates, would fall within the central range, although at its upper end. For the other years, the nominal growth forecasts are in the central range of the probability bands calculated by AIReF.

    Despite the similarity of the Government’s macroeconomic scenario to that of AIReF itself, the technical assumptions on interest rates used by the Government might be optimistic as they do not reflect inflationary pressures. The Government puts the interest rate on the 10-year Spanish government bond at 0.8% in 2022, when this yield currently stands at around 1.8%.


    The balance of risks to growth expected by the Government and AIReF itself is skewed downwards, especially in the short term. The economic recovery that began in 2021 was accompanied by tensions in global value chains and in raw material markets, especially energy markets, which have become more intense and persistent following Russia’s invasion of Ukraine. These tensions could be exacerbated if the invasion results in cuts in supplies and further tensions in raw material markets.

    In addition, the coronavirus remains a key determining factor for the economic situation. Specifically, the recent increase in cases and the “zero coronavirus” policy in the People’s Republic of China might accentuate supply problems in manufacturing industry, given this country’s importance in global value chains. In addition, the emergence of new variants that could slow the pace of normalisation of tourism, which has provided favourable surprises over recent months, cannot yet be ruled out.

    Moreover, the inflationary tensions that emerged in 2021 could intensify and make the growth-inflation combination more adverse than expected by the Government and most analysts, including AIReF. The intensity of the price increases and the expectation of greater persistence might trigger spirals of price and wage rises. According to AIReF, this could lead to a further tightening of monetary policy and a worsening of financing conditions, which would place a drag on consumption and investment. The greater energy intensity of the Spanish economy and the high pass-through of energy raw material prices to household prices and business costs could lead to a loss of competitiveness vis-à-vis the outside world.

    As for the RTRP, more than one year after its approval, no information is yet available on the level of execution of revenue and investment projects. The Government’s macroeconomic scenario does not provide details of the macroeconomic impact associated with this instrument either in the short or medium term. This adds complexity to the assessment of the Government’s scenario and has prompted AIReF to make a new recommendation.

    AIReF believes that if bottlenecks are accentuated and inflationary tensions are intensified, the boost to economic growth associated with the RTRP could be undermined. The succession of supply-side shocks is particularly adverse for some sectors that are key to the development of the RTRP, such as the automotive, digitalisation and energy transition sectors. Therefore, the multiplier effect associated with the RTRP could be lower. In fact, AIReF has already revised the short-term multiplier downwards (from 1.2 to 0.9), which results in a reduction in the estimated impact on the level of GDP associated with this instrument.


    AIReF issues a new recommendation as it believes that an effort at transparency and coordination between all areas of the General Government is necessary to make available the information required in the framework of the European Commission’s communication of March 2nd 2022. In particular, this information refers to execution of the RTRP funds in national accounting terms over the horizon of the Stability Programme, which is very useful when assessing its impact.

    It also repeats the recommendation to offer more information on the budgetary and fiscal measures included in the macroeconomic scenario with the aim of increasing the rigour of the endorsement process. The law establishes that the endorsement refers exclusively to the macroeconomic outlook and not to the public finance scenario. However, given the interrelations between the two aspects, AIReF believes that an endorsement with greater rigour would require more detail on the measures incorporated, particularly when these are of the importance of those contained in the RTRP.

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