The debate has long been rooted in the offices of economists and has begun to jump into the political arena. Is a new global recession in the making? And, above all, of what magnitude? The truth is that there is no consensus, although there are data to consider both an affirmative and a negative answer. And even to doubt. However, what is unquestionable is that a slowdown in economic activity is taking place and it is not clear what scenario it may lead to.
The main component is inflation, which last week already reached double digits in the interannual rate (10.2%). The war in Ukraine, together with the supply problems to the industry from Asia and the slowdown in the economy in China due to the latest confinements in Shanghai, have triggered the CPI. However, this overheating had already been brewing prior to February, thanks to the increase in electricity and fuel. The indicator placed its annual variation in the second month of the year at 7.4%, more than one point above that registered in January. In other words, in five months the rise has been almost four percentage points.. A rate that has thrown off balance the forecasts of those responsible for economic administrations and also of households, who have seen how the cost of the daily shopping basket is accentuated every day, especially in food.
This situation comes in a context in which there are elements that could contribute to the recession and others that suggest that this possibility is unlikely or, at least, distant. Technically, for a recession to exist the GDP must accumulate two consecutive quarters in a negative rate, which seems implausible at the state level at a time when, despite prices, tourism and consumption associated with it are going to pull the economy up. Although, yes, only for a few months.
Another reason to not get carried away by extreme pessimism was given last week by Laboral Kutxa experts. The Spanish economy, due to its “clear delay” in terms of growth compared to those of its immediate environment, is still in an expansionary cycle; that is to say, that it is pending to reap the fruits of the reactivation begun last year. The lower dependence on Russian gas compared to economies such as Germany or Italy also works in its favour, as well as job creation data. However, the threats are there. The Bank of Spain does not like to minimize them. On June 10, its director of Economy, Ángel Gavilán, did not deny the risk of recession, but stated that it is lower than in other countries.
Because there are other factors that lead us to think that a recession, or at least a crisis with lasting effects, is yet to come. In the United States, where economists have been warning about inflation for months, there are voices that see it as inevitable by the beginning of 2023, and from there it would spread to a Europe in which the consequences would be more serious due to the impact of the reduction in gas and oil imports from Russia. The OECD has already warned that “the pace of recovery is going to moderate” and the World Bank estimates that global growth at the end of the year will be 2.9%, when it forecast in January an already cautious 4.1 %. The arguments? The household savings rate is falling due to the effect of inflation and consumer confidence is plummeting in all countries, which threatens to hurt businesses. The Federal Reserve has raised interest rates and the ECB is preparing to do so, but they must fine-tune so that this readjustment does not cause the so-called second-round inflation after the summer, when wage increases arrive to offset the CPI. In addition, in the case of Spain, it also plans its high volume of public debt.
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