Let's begin by clarifying what GDP is according to the Wikipedia: Gross domestic product" is the sum of all final goods and services produced by a country or an economy, produced within the national territory by both domestic and foreign companies, and recorded in a given period (usually one year).
What the GDP does not contemplate:
- The self-production (or self-consumption), wealth produced and consumed within households, since it does not pass through the market.
- In the case of services it is very difficult to distinguish between price increases due to quality or services and price increases due to inflation, making this a sector where it is difficult to estimate their variation.
- It does not take into account the natural resources or miners in the country.
- In the case of a natural disaster GDP only accounts for the destruction of assets indirectly, through their impact on production, but does not take into account the net destruction of assets. However, GDP does take into account post-disaster reconstructions.
- The real contribution of the Public Administration to economic wealth. Their costs are usually included in the GDP costs, in the absence of turnover.
- Only uses accounting variables that can be expressed directly in monetary terms and, therefore, disregards aspects such as ecological costs or social costs: the ecological impact of production, inequalities in the distribution of wealth, gender inequalities, etc.
GDP is not an indicator of quality of life or well-being, only material.
For these reasons, among others, Simon Kuznetsone of the creators of national accounting that gave rise to the use of GDP as an economic indicator, as well as numerous subsequent authors, have criticized the use of GDP as a synonym of social welfare. GDP refers only to the material well-being of a society. This is why GDP economic growth or decline figures are used politically as an indicator of whether the economic policies applied are positive or negative for the country.
Finally, it should be noted that GDP is usually interpreted according to its evolution: that is, if it is increasing during a period, the economy is growing; if it is decreasing, it would be in decline; if it is decreasing, it would be in decline; if it is decreasing, it would be in decline. recession.
After this introduction, let's get down to business.
As we have seen before, GDP is used politically to approve or criticize a government's economic performance. It is therefore a tool for political pressure, and that is why estimates are made annually as to whether GDP will grow, and by how much, or decline.
Under a logical prism, it may seem that it does not make much sense to make this analysis of economic witchcraft beforehand, since the sensible thing to do would be to make a balance a posteriori, to analyze if the management has been positive or not and thus change the actions for the following year. Doing it beforehand may seem to have more of a flattering or stoning motivation to the government of the day, following a partisan agenda. However, the purpose of these forecasts is usually to give reliability, or not, to the government's budget. This Newtral article explains.
Let's take a look at what was planned for 2023 and the final result.
And above all, those who were behind these forecasts, the think tanks. The Spanish government informed Brussels in October 2022 that it expected the Spanish economy to grow by 2.1%. Finally, the INE published that growth was 2.5%.
| Entities with forecast reports | Expected positive GDP | Deviation from actual |
|---|---|---|
| Spanish Government | 2,1 | 0,4 |
| CEOE | 0,8 | 1,7 |
| CaixaBank Research | 1 | 1,5 |
| Funcas | 1 | 1,5 |
| Mapfre | 1 | 1,5 |
| Banco Santander | 1 | 1,5 |
| Loyola University | 1 | 1,5 |
| Oxford Economics | 1,1 | 1,4 |
| CEEM-URJC | 1,2 | 1,3 |
| IEE | 1,2 | 1,3 |
| AFI | 1,3 | 1,2 |
| Repsol | 1,3 | 1,2 |
| BBVA Research | 1,4 | 1,1 |
| CEPREDE-UAM | 1,5 | 1 |
| ICA-UCM | 1,8 | 0,7 |
| Chamber of Commerce | 1,9 | 0,6 |
| Economic Team | 2,1 | 0,4 |
Employers paint bad scenarios when they see more taxes on the horizon.
The economic technicians of the CEOE seem to be the most inept of the bunch, with a growth forecast three times lower than what finally turned out. Perhaps the reasons for this fateful forecast lay in the fact that they anticipated that the rise in the SMI The creation of new taxes on large companies, energy and financial, would lead to a disaster, although in the end they announced that they had broken profit records. As well as that the creation of new taxes on large companies, energy and financial, would lead to a disaster, although in the end they announced that they broke profit records. The curious thing is that the Institute of Economic Studies (IEE), the think tank The CEOE's report forecasted a growth of 1.21GDP3T (1.31GDP3T below the actual). In the same house, different (bad) forecasts.
A dark think tank where experienced people work.
On the opposite spectrum we find "Economic TeamThe "GDP growth forecast was the same as the Government's, so it only deviated, downwards, by 4 points. The curious thing, in this case, is that this think tank is a law firm founded by Rajoy's former Minister of Finance, Cristobal Montoro, and its team includes former public officials of the Popular Party and former high-ranking officials of the Ministry of Finance (and which is under investigation by Anticorrupción). Perhaps that is why the forecast coincided with that of the Socialist Government technicians, due to their experience in the matter.
However, the forecasts that usually make the headlines in the Spanish media are those of the CEOE/IEE binomial, which, as we have seen, are not very accurate, instead of other forecasts that seem to be made by people with some experience in the field.
The banks go about their business.
In the final note, let's look at the financial institutions, the banks, which theoretically have the most information (and economic technicians) to carry out these calculations of futures with greater precision. In spite of this, they were among those that failed the most, downwards. In this case, this failure may have been due to the fact that they were approaching a general elections and that the Government was pushing for the implementation of a special levy on these banks. Saying that the economy was not going to do very well could have helped to curb this tax.
In this way we can clearly see that the reports of economic entities are very much affected by their own interests, and that their analyses are never objective or impartial, but rather their technicians, or those who pay them, make interpretations of the economic situation according to their own convenience at any given moment.
With information from the newspaper https://www.elsaltodiario.com
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