The spread of vaccines among a large part of the Spanish population is beginning to have an effect on the perception of economic forecasts. This is reflected in the Economic Consensus report for the second quarter of 2021, an analysis prepared by PwC since 1999 based on the opinion of a panel of more than 400 experts, managers and businessmen.
The vaccination campaign and the gradual lifting of restrictions in the face of the summer season are making themselves felt in the improvement in the growth expectations of the economy in the last quarter. The experts, businessmen and executives consulted foresee that activity in Spain will reach an increase of 6.3% in 2021, which is eight tenths more than three months ago.
The improvement in expectations also extends to the year 2022, in which a growth of 5.4% is expected, six tenths more than in the previous quarterly report.
This optimism is clearly reflected both in the opinion of the panelists on the current situation of the Spanish economy, which 86.9% rate as better. It is also noticeable in their expectations for the next quarter, since 92.5% of the panelists expect it to evolve favorably.
Demand from families
Behind this majority assessment is the positive evolution of household demand, which for most experts will maintain its strength in the coming months. Thus, 82% say that consumption will increase in the next six months and 54.5% estimate that home sales will also increase.
Although the economic-financial situation of companies in general is not so positive and is considered by a majority of experts (74.1%) as fair, in this case too, more optimism is beginning to be seen. 65.4% expect it to improve in the next three months.
In fact, three of the parameters that usually better reflect the business situation, such as expectations about the behavior of productive investment, exports and job creation, improve substantially compared to the Economic Consensus of the first quarter of the year.
The indicator in which the most notable increase is detected is the one affecting job creation in the next six months. 72.4% anticipate an improvement in the labor market, which is 37 points more than in the previous panel. Those who expect an increase in productive investment also increased by 28 points -up to 62.9%. In the case of exports, up to 80% of experts foresee a growth in exports, which is 18 points more than three months earlier.
Despite the greater optimism after the pandemic, the analysis also reflects that there continues to be a certain level of uncertainty, especially in the one-year forecasts. Thus, the percentage of those who think that the situation will be better in twelve months falls slightly, from 87.5 to 79.4 percent, predictably due to the gradual withdrawal of fiscal stimuli.
The shadow of inflation
Precisely in recent months one of the shadows that hangs over the economic recovery is the escalation in the costs of raw materials, energy and some basic services such as transport. Despite this, the panel of experts, businessmen and executives shows that inflation will remain under control, despite the rebound in prices experienced this year after the international reactivation.
Their estimates suggest that the CPI will close 2021 with growth of 2% and will moderate in 2022, to stand at 1.7%. Of course, the Economic Consensus begins to glimpse for the first time in many quarters the possibility that companies will increase prices in the coming months as a result of the strength of demand. Although it is still a possibility with still reduced support, a significant 25.3% of those surveyed already point in this direction.
Another of the chapters consulted with experts and business executives focuses on the evolution of interest rates in the next two years. The vast majority coincide in pointing out, in percentages above 80%, that the European Central Bank (ECB) will continue to maintain interest rates at 0% and that it will maintain its asset purchase programs for the next six months. The opinion, however, is different when asked about what could happen a year from now: 59.4% expect the ECB to reduce its expansionary policies.
Refusal to raise taxes
The Economic Consensus for the second quarter prepared by PwC also takes advantage of it to gather the opinion of experts, businessmen and executives on the tax reform proposed by the Government and for which it has created a commission of experts in a monograph entitled The next tax reform.
The conclusion is clear, the majority oppose a tax increase as a way to compensate for the increase in public debt generated by the pandemic and ask for measures to adjust current public spending, strengthen the fight against tax fraud and a reduction in taxes. deductions, bonuses and reduced rates.
68.3% are opposed to a generalized increase in taxes, 75% to an increase in the taxation of wage income and 76.9% to a rise in social contributions. Thus, for 76.5% of the experts, the increase in collection should come from the adjustment of current public spending. 73.1% advocate for an effective fight against tax fraud and another 46.2% defend a reduction in deductions, allowances and reduced rates of various taxes.
If each tax is analyzed, in the case of Corporation Tax, the majority believe that its reform should focus on its simplification (58.3%) and that the verifying action of the Tax Agency should focus on international groups and companies screen and heavily indebted investment vehicles.
46.6% of those interviewed affirm that the Corporation Tax should reduce its rate to the average existing in the countries of the European Union. 77.7% qualify as adequate the G-7 proposal to establish a global minimum rate of this tax, although the consensus is lower among those who think that this initiative will eventually materialize (57.3%) and those who will not (42 , 7%).
The panelists are also mostly in favor of taking advantage of the tax reform to abolish Inheritance Tax (56.3%) and Wealth Tax (57.3%) in our country.