After the last summer, the INE (National Institute of Statistics), gave the first warning to the Government about its forecasts. With a large portion of the population having been vaccinated against coronavirus, and with tourism already pushing, the agency decided to throw a jug full of cold water on revising Spain’s economic growth from 2.8 % to 1.1% in quarter 2.21. According to the definitive statistics, Spain’s growth would be less in 2021. It forced Nadia Calvino, vice president, to intervene. The vice president Nadia Calvino spoke out, saying she was “cautious” when faced with the data from INE. She also advocated for an “intense recovery regardless of volatility of indicators in an abnormal environment due to the pandemic.”
This was the source of the controversies surrounding the INE over the past months. They have resulted in the resignation of Juan Manuel Rodriguez Poo as president, citing personal reasons. According to sources at the Ministry of Economy, his dismissal was set for the following weeks. These sources confirm that the movement is a “reinforcement of the institution” and exclude interference. .
Calvino’s team continued to be concerned by the INE’s statistics updates in recent months. The INE was already protected by difficulties in making approximate estimates of economic evolution during a convulsive period like the one that occurred in the last months in 2021. He explained that the inherent difficulty of measuring the current situation must be considered. This is a time of rapid and dramatic changes in the short term evolution of economic activity. It also represents a unique statistical challenge, due to both its origin and its size. The agency also clarifies that it has reviewed all statistical series of the economy from the first quarter 2018.
They have contrasted the weak GDP data with labor statistics and budget execution in Economy. Calvino has sometimes disregarded GDP, which indicates that the Spanish economy is “very positive” and that the recovery “is strong” and reaches “whereit matters”: employment. “This has accumulated nine month of growth.” It has 20 million contributors, and a deficit of 7% in 2021. This helps ensure that Spain does not suffer the same crisis that the INE verifies each quarter.
According to successive GDP statistics, the body has confirmed that the Spanish economy is not growing as fast as originally expected. The Executive estimated a 5.1% increase in 2021, which was far below the 7% expected. It did this by 0.2% in the first quarter. This was conditioned by the last blasts of the coronavirus and the beginning of the war in Ukraine.
The other stumblingblock that has created friction between Economy and INE is exactly the same. Nadia Calvino, who was stoked by the record March CPI (Consumer Price Index), of 9.8% year-on year (a maximum in three decades), insisted that the institution include the millions electricity contracts in force on the free market and not just the prices in the regulated market. (About 10 million contracts), which are more volatile and more expensive over the past year, which increases inflation.
It’s not easy technically. It is so difficult that the INE tried to include these free market contracts in the official inflation data for January. Half a year later, it still isn’t. Sources at the institution indicate that it was then “impossible”. “As long the methodological problems are not solved, we cannot give an estimate of when these data will be incorporated and adjusted to economic reality. Prices will continue to rise but if you include free contracts (usually with fixed or stable rates), then the inflation data will change. It could be less moderate than the current one. Sources in the energy sector confirm that this possibility of moderation is not possible because free contracts are more expensive and more stable than the current one. Also, the prices and economic conditions for the most recent revisions have always been higher.
Calvino revealed to Calvino that an electricity company was not collaborating to the INE in order to provide the data necessary to allow for the inclusion of electricity prices on the free market into the monthly inflation calculation.
This weekend saw the approval of the anticrisis plan. The latest discrepancy was this weekend. Calvino claimed yesterday that measures taken by the Government to reduce the price impact of war in Ukraine had “lowered inflation between 2/3 points”. “We have been taking measures that have proven effective, they have lowered inflation between 2 to 3 points, they have placed inflation in Spain under the average of Europe, eleven countries have higher inflation than Spain,” he said during his speech to the Senate control session.
According to his calculations, if President Obama had not approved tax cuts for electricity, the CPI would have risen by 11.7% in May. This is 8.7% less than the INE certified. This institute publishes the CPI at constant tax on a monthly basis. It accurately reflects the inflation behavior in May, when it rose 9.6%. That is, the measures taken have reduced the increase in prices by nine tenths.
