Tourism will not fuel at the desired intensity in summer due to the slowness of vaccines, which, together with the delay in European funds, will strongly reduce the growth forecast this year. This is confirmed by the Independent Authority for Fiscal Responsibility (Airef) in the report on the budget lines that it has just published, in which it worsens your estimate of GDP growth at 6.6% in 2021, 1.6 points less than the one he drew in his central hypothesis a few months ago.
The scenario that Airef now casts is that this summer only 30 or 40% of foreign tourists who came to Spain before the crisis will arrive. The agency has recalled the auguries of the World Tourism Organization (UNWTO) by recently postponing until 2023 the recovery of the sector to pre-pandemic levels, although its forecasts are somewhat more optimistic. The institution headed by Cristina Herrero assumes that there will continue to be restrictions and outbreaks like the ones we have seen in recent months, but notes that there will be some recovery in the sector this year.
Added to this is the fierceness of the third wave and the approved restrictions. This means that, according to its latest real-time GDP forecast, which varies according to the economic data that is becoming known, the economy it will contract 0.6% in the first quarter.
To complete the cocktail of downside risks, the slowness with which the loan is being processed also plays a role. European funds plan, which means that it will not have any impact in the first half of the year and is delayed to the second half of 2021. Thus, the effect on GDP calculated by Airef for these resources falls from 2.7 points to 1.6 . Most of the positive momentum is delayed from 2021 to 2022, at a time when the Government will approve the Resilience, Transformation and Recovery Plan next Tuesday.
«All this is conditional on the design of quality projects and that there are no delays. in the absorption and implementation capacity ”, alerts the Airef. The Executive included 27,000 million in the Budgets for this year with the aim of accelerating the investment of European projects, but the approval of Brussels is lacking.
In any event, the Government will approve a sharp reduction in its growth forecast. The Executive will cut its estimate, which currently stands at 9.8% including European funds and 7.3% without them. The Fiscal Authority’s forecasts include this last impact and indicate that in 2022 there will be more growth, as the inertia with which activity will increase as recovery takes hold.
The deficit will close at 7.6% of GDP
Along with this, the Fiscal Authority improves its estimate of the deficit to 7.6% of GDP, one tenth below what the Executive believes. This is due to a better closure in 2020 than initially predicted – it ended at 10.97% of GDP, compared to the estimated 11.3%. The reduction in the cost of the measures this year will subtract one point of deficit, even adding the aid to companies recently approved, due to the lower weight of the ERTE (10,793 million less) and the benefits for cessation of activity (2,537 million difference, compared to 2021), counting that they end in May and June, respectively.
The fact that this year the exceptional expenses for integrating the losses of the Sareb will not be repeated and the Castor project, removes another point of imbalance and, the rest, comes from the improvement in collection, the denominator effect as GDP grows and the reduction in spending.
353 million for lowering VAT on masks
Interestingly, and as reported by ABC, the VAT reduction on masks will have a lower collection effect that is considerably less than what the Treasury defended when it initially rejected this measure. Lower VAT from 21% to 4% at Surgical masks will have an annual impact of 353 million euros compared to the 1,568 that the Ministry wielded in its day.
Along with this, income forecasts are deflated. The anti-fraud law, which is still being processed, will collect 273 million less than the 491 that Airef estimated months ago, and almost a quarter of the 828 that the Government anticipated. The Waste Tax will also collect a quarter of the 861 that the Executive estimated: Airef estimates it at 215 million only, since its preliminary project has not yet been approved. Something similar happens with the new tribute to polluting plastics: if the Treasury estimated its income at 491 million, the Airef lowers it to 98, almost a fifth.