The National Institute of Statistics (INE) has once again revised upwards the growth data of the Spanish economy in 2021. This Wednesday, it published a preview of the results of the Statistical Review of National Accounts 2024 in which it was communicated the impact that this new calculation will have on nominal GDP in 2021, the reference year for the new series that will be published soon. Although this review has different characteristics from those carried out so far, it remains surprising that there is once again a substantial increase in GDP, once again changing the interpretation that had been made until now of the end of the pandemic.
In a brief and unexpected press release, the INE announced a new upward revision of the GDP estimates. The change is limited for the time being to the 2021 GDP, the magnitude of which is now estimated at 1.1% higher to reach the level of 1,235 billion euros. This may seem minimal, but this is the third upward revision. To properly assess this change, it must be compared to the initially estimated growth and the effect of subsequent revisions. The attached graph shows this process.
In its first estimate, at the beginning of 2022, the INE estimated nominal growth at 7.2%. Subsequent revisions have increased this rate, first timidly (up 0.7% in September 2022) and then over the following two years, adding 1.3% in September 2023 and 1.1% now. In total, 3.2 points of GDP more in 2021: the equivalent of 32,480 million euros that, until now, the INE had not measured correctly.
Although this latest revision is due to reasons other than the mere availability of new information, as can be seen, the INE has followed a long and winding path to finally estimate the nominal growth of the economy at 10.4% in such a decisive year. 2021. It is worth remembering that at that time our country was emerging from the effects of the confinement caused by the COVID crisis and it was uncertain whether Spain would be able to recover quickly from an unprecedented drop in activity. . With the figures published then, it was difficult not to fall into pessimism. A growth of 3.2 points more already reflects a very different panorama. And that’s for now. because we still have to see the complete series that will be published on September 18. It is possible that the increase will be even greater.
The review therefore constitutes a confirmation of our theses, as we have highlighted in countless articles on elDiario.es. As the graph also shows, since January 2022, one of us was already announcing that the INE figures were impossible to reconcile with the macroeconomic picture obtained with other sources, mainly those related to the tax bases of the main taxes. To the reader interested in consulting the newspaper archives, we recommend reading what was published at the time: we estimated nominal growth at 11.8%, which seemed totally crazy compared to the 7.2% that the INE predicted at the time. At that time, no other media questioned the economic picture offered by the INE’s national accounting and only a few analysts pointed out certain inconsistencies. The independent public institutions that are traditionally responsible for economic analysis (the Bank of Spain and Airef) did not raise any objections at that time, nor during these two years.
Since then, the review process has been far from following a transparent and up-to-date channel. Initially, officials invoked dubious technical reasons for not using tax records relating to salaries, company profits or sales. Subsequently, the review was undertaken with both parties: any reason was denied by those who questioned the figures, but the changes were then introduced without self-criticism. As recently as April of this year, the head of national accounts announced before the Congress of Deputies in front of almost 100 people that “there would be no significant revision” in September. Today’s figures refute this claim and confirm the wrong path taken by the INE in these years.
This whole issue would be a small academic debate if it were not for the enormous political and social importance of GDP figures. Even on the eve of the July 2023 elections, public opinion in our country has been hammered by the fact that Spain was the last country to recover from the COVID crisis, the worst in all of Europe. The higher growth in tax collection has been interpreted at best as a strange emergence of the underground economy and, at worst, as evidence of the “tax hell” imposed by the authorities. Today, all these interpretations are largely questioned or invalidated by the data, but citizens’ economic perceptions will take longer to be updated.
Although the economic cycle has now improved significantly, what has happened is an important warning about the health of our country’s national accounts. In a few weeks we will know the final figures for real growth (i.e. excluding the effect of rising prices), but today we can put forward a first important idea: the 2021 revision is the largest that, for a given year, has been carried out by the INE in its most recent history. We can affirm this conclusion with the archives available on their website for the last twenty years, but we may have to go back to the early 1980s to see a change of equal magnitude.
Faced with an unprecedented scenario, the transparency of the INE has always fallen short of expectations. For example, in the review published this Wednesday, the INE disseminates the 1.1% revision in a few lines, emphasizing that it is the result of a double-entry revision. The integration of new statistical sources, such as the 2021 census data, increases the levels by 0.7%. On the other hand, the new classification procedure for some expenditure items contributes to an increase of 0.4%. This silence has nothing to do with the much more detailed and transparent review provided a few months ago by the Active Population Survey (EPA), also prompted by the census revision. We greatly fear that on September 18, when the complete series is published, the INE will continue with the usual path of issuing a brief press release and continue without being accountable to public opinion.
In conclusion, it is advisable to recommend that the National Accounting Directorate of the INE always remains attentive to the evolution of the tax bases published quarterly by the Tax Agency. This is a magnificent example of the incalculable value of the information that all taxpayers, families and companies, declare to the Treasury. The global tax base of taxes is a quasi-census synthesis of Spanish economic activity and the growth that the AEAT publishes at the end of each quarter records revisions of very small magnitude. As an example, in the monthly report of October 2021, the tax bases for the first nine months of this year increased by 12.4%, not far from the 13.3% at which the growth of the bases for 2021 is estimated today. At the beginning of 2022, the National Accounting of the INE had used this information, the 2021 GDP would have almost returned to the level of 2019 and the entire post-pandemic economic discourse would have been different, injecting citizens with a well-deserved optimism that was then stolen from them.
