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Where are we after the revision of GDP?

After the spread of the pandemic, public opinion had to deal with a particularly pessimistic story about the economic evolution of our country. Spain would experience a particularly severe recession in 2020 and, subsequently, only a partial recovery, and would be far behind the rest of the EU economies. Today we learned of a correction in the statistical series that supported this story. The new GDP data published by the National Institute of Statistics shows a substantial revision of the registered growth in 2021 (6.4 percent compared to the previous 5.5). This shift, combined with higher growth the following year, puts GDP back to pre-pandemic GDP until 2022 (rather than 2023 as previously thought). According to the new perspective, Spain would have a trajectory closer to the big three economies of the Eurozone (Italy, Germany and France).

However, those who have read our articles in recent months will easily confirm that this change is substantially less than we have mentioned. In our analysis, we focused on nominal GDP in 2021 and gave a possible revision range of 3% to 4.2%. The figure released today changes nominal growth for that year to 1.3%. It’s a big change, but the difference with our work is still noticeable. Fortunately, published data can point to commonalities as well as differences. This analysis has important conclusions, because with the revisions made by the INE, the behavior of the Spanish economy continues to shed a lot of light. The analysis of GDP data is not a mere numerical debate, but influences the government, social agents and public opinion.

As in other cases, it is convenient to analyze the gross domestic product from three different perspectives: income, production and spending. In our paper, we have focused the anomalies of previous national accounting series on one or two big points from each perspective. Thus, through income in GDP, we have highlighted the need to revalue wages and business surpluses. Regarding spending, we bet on the need to explore and increase household consumption, as well as investment in housing and other construction. Finally, when analyzing the economy through production, we pointed to the underestimation of the added value generated in various sectors, mainly in construction and market services. Generally speaking, the data published today includes in some cases substantial changes, while in others there are almost no changes.

Income: higher wages, no change in business surplus

If we analyze GDP according to incomes, a significant increase in wages can be observed in the last four years (2019-2022). The change is particularly important in the case of 2021, the year in which there was a discrepancy that the salaries of the National Accounts were lower than those declared to the tax agency, after the necessary adjustments were made by the provincial territories (Basque Country and Navarre) and domestic employees. This situation was a folly which, fortunately, has been rectified today. In fact, the INE’s upward revision of the payroll tax in 2021 (7.5% annual increase) is practically identical (7.7%) to what we infer from tax statistics. This increase in wages of almost 15,000 million would be the only relevant change in GDP through earnings. INE also revised its estimates of operating hours and trends closer to EPA’s records. Both changes are very relevant because they affect the good behavior of the labor market.

The surprise comes from the fact that the gross operating surplus of the national economy barely changes. This large item includes two fundamental components for knowing the health of the business sector in our country: the gross income of the self-employed and the gross surplus of non-financial companies. Although sufficient details about these two quantities will not be known until next week, everything indicates that there has been almost no corresponding modification. This fact remains surprising given the good evolution of the most comparable variable – gross operating income – reflected in personal income tax and corporate tax.

Spending: More investment, no change in private consumption

In GDP, through spending, there has been a sharp revision of investment, which in turn affects a significant increase in investment in housing and other constructions. In fact, investment in these two assets grew at a nominal annual rate of 2.1%, rising 7.1% in 2021. This change coincides with the strong recovery of real estate investment that we mentioned in previous articles (nominal growth of 9.3%) and allows us to dispel the image that the construction sector suffered a relapse in 2021. In a statement published today, the INE highlights the improvement of information sources in this sector, indirectly pointing out the shortcomings of the previously used records. The published reports also show a sharp increase in investments in stocks and stocks, an area in which we would not have thought of changes. Although by definition this is a very volatile element, it would be useful to know the reasons for this change.

On the contrary, there has been almost no change in household consumption and the prevailing outlook is unusually pessimistic. This situation is contrary to the more favorable evolution of the final expenses of the entity declared in VAT, which, as it was argued in previous cases, indicates a greater dynamism of family consumption. In a few weeks we will know more detailed estimates to improve the comparison between both quantities.

Added value: Shy grows in almost every branch

When studying gross domestic product through value added, changes are observed in practically all sectors, although the intensity of the discussion is less than what we mentioned then. We must remember that in this case we exclusively use the structural business statistics published by INE, and with these statistics, the statement prepared today also indicates the national accounting as the source of information. The discrepancies between both records must be analyzed if we want to understand the adaptation of the Spanish economy to the post-pandemic world. Again, we’ll have more complete information in a few weeks.


Almost 600 days ago, in January 2022, Francisco Melis published an article with the simple title: “Does INE estimate GDP growth in 2021?” Except for ignorance on my part, most of the analysts and media did not even take this possibility seriously for the entire last year. In many cases it was easier to continue to insist on the Spanish anomaly than to question the consistency of the GDP data. The good news is that this new publication of the National Reports allows us to settle the debate about “why we didn’t recover from the pandemic” and what led to explanations of dubious value. Current GDP series provide a better macroeconomic picture, but still indicate significant inconsistencies. The task now is to understand what the strengths and weaknesses of the economy are, and for this it is important that all participants take the national accounts as the first point in their analysis, not as the end. The experience of these years, and not only in this country, shows that what was originally published need not be a very accurate balance.

Source: El Diario





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