The Independent Authority for Fiscal Responsibility (AIReF) endorses and considers the forecasts for 2023 presented by the Basque Country, Galicia and Aragon feasible. These macroeconomic forecasts are made against a backdrop of uncertainty that complicates their assessment at a national level, but heightens them at a territorial level since the latest information available on Spanish Regional Accounts is the benchmark for the year 2020. Although the forecasts made by the three Autonomous Regions are higher than AIReF’s forecasts, they stand within the range of estimates of the consensus of analysts and are similar to the estimates provided for in the macroeconomic outlook that accompanies the General State Budget.
The macroeconomic forecasts of these regions are framed in a context in which the materialisation of a number of risks identified by AIReF since the end of 2021, and particularly over the course of 2022, will impact the economic outlook of the European Union and Spain in the coming years. Specifically, AIReF indicates the risks regarding the energy crisis, the persistence of inflation and the toughening of financing conditions.
Basque Country
The macroeconomic scenario of the Basque Country, which considers these risks and constraints, indicates that the GDP of the Basque Country could grow by 4.3% in 2022. This forecast falls within the range of estimates of other private bodies and institutions, but AIReF considers that this scenario may be optimistic, given the rapid decline being recorded by most economic activity indicators. For 2023, the Basque Country estimates GDP growth in volume terms of 2.1%, a rate that is higher than AIReF’s estimate of 1.4%, but within the range of estimates of the consensus of analysts of the Autonomous Regions and similar to the estimate provided for in the macroeconomic outlook that accompanies the General State Budget. Taking these constraints into account, along with the general constraints inherent to the macroeconomic uncertainty and the specific constraints of the Autonomous Regions derived from the revisions of the National Accounts, AIReF considers that the forecasts for 2023 presented by the Basque Country are feasible and, as such, endorses them.
AIReF reiterates the advice on good practices on the need to provide expenditure forecasts in Regional Accounting terms. It also considers that it would be desirable to include a macroeconomic scenario beyond 2023, since this is one of the fundamental elements for medium-term planning. Finally, AIReF makes a recommendation consisting of including the assumptions on the macroeconomic impact associated with the Recovery, Transformation and Resilience Plan (RTRP) for the period forecast among the information provided.
Galicia
Galicia, for its part, estimates that GDP could grow by 3.6% in 2022. Although this forecast falls within the range of forecasts of other private bodies and institutions, AIReF considers that this scenario may be optimistic, given the outlook for the worsening of economic growth. For 2023, Galicia estimates GDP growth in volume terms of 1.7%, higher than AIReF’s forecast of 0.6%. However, this stands within the range of estimates of the consensus of analysts of the Autonomous Regions and is lower than provided for in the macroeconomic outlook that accompanies the General State Budget. Furthermore, the GDP growth estimate for the Region at current prices, at 5% in 2023, is identical to AIReF’s estimate. Taking these constraints into account, along with the general constraints inherent to the macroeconomic uncertainty and the specific constraints of the Autonomous Regions derived from the revisions of the National Accounts, AIReF considers that the forecasts for 2023 presented by this Autonomous Region are feasible and, as such, endorses them.
AIReF underlines that this Region includes the results of the simulations of the impact of the Recovery, Transformation and Resilience Plan (RTRP) on the economy of Galicia. The potential impact of the RTRP is projected at 0.7 percentage points in 2022, 0.9 percentage points in 2023 and higher than 0.7 percentage points in the following years. However, the institution stresses that, given the importance of medium-term planning, it would be desirable to include a macroeconomic scenario that covers a longer period than the annual budget. AIReF reiterates the advice on good practices proposed to this Region in October 2021, consisting of including expenditure estimates in Regional Accounting terms.
Aragon
The macroeconomic scenario of Aragon incorporates the impact of the invasion of Ukraine and the current uncertainty regarding the pace of economic activity and inflation. According to this scenario, the GDP of Aragon could grow by 4.3% in 2022, a forecast that stands within the range of the forecasts of consensus and is in line with the forecast scenario estimated by AIReF for this year. For 2023, Aragon forecasts GDP growth in volume terms of 2.1%, a rate that is higher than AIReF’s but within the range of estimates of the consensus of analysts of the Autonomous Regions and identical to the estimate contained in the macroeconomic outlook that accompanies the General State Budget. Taking these and the aforesaid constraints into account, AIReF considers that the forecasts for 2023 presented by this Autonomous Region are feasible and, as such, endorses them.
Aragon warns of the existence of downside risks regarding economic growth for 2023, although it considers that the rollout of the Recovery Plan could cushion them, boosting growth in 2023. AIReF also warns of the downside risks regarding the growth estimate made by Aragon for 2023, given the high percentage of some electro-intensive sectors in this Region’s production. On the international front, the escalation of geopolitical tensions with Russia and the difficulties of European economies in finding alternative energy sources to Russian gas at reasonable prices could have a negative impact on growth. At a domestic level, the deterioration of purchasing power and household confidence should also be underlined.
To ensure the availability of more homogeneous information and facilitate comparability, AIReF reiterates the advice on good practices proposed to Aragon in November 2020, consisting of including expenditure estimates in Regional Accounting terms. AIReF also considers it would be desirable to include a macroeconomic scenario beyond 2023, since this is one of the fundamental elements for medium-term planning. Lastly, it makes a new recommendation to include the assumptions on the macroeconomic impact associated with the Recovery, Transformation and Resilience Plan (RTRP) for the period forecast among the information provided.