The departure of the president of the National Institute of Statistics (INE) brings tail. The Ministry of Economy insists that its until now president, Juan Manuel Rodríguez Poo, has left the position of his own free will. And he hopes to find him a position as an external adviser to the agency. The affected person himself has transferred that he leaves the post for personal reasons. However, last Wednesday, as confirmed by four sources, Economy transmitted doubts about his continuity. At the INE, the idea that the dome was changing had been flying ever since. And on Friday, a meeting took place at the Ministry between Rodríguez Poo and the economic vice president, Nadia Calviño, after the statistical institute had revised the GDP for the first quarter downwards, from a quarterly growth of 0.3% to 0, two%. Despite the meeting on Friday, the president of the INE was not completely clear about the outcome until after the weekend. His resignation ended two months of tensions with the ministry over his future.
With the current official data from the INE, Spain continues to trail behind Europe in recovering from the pandemic. The Minister of Social Security, José Luis Escrivá, has openly criticized the statistics institute’s figures on numerous occasions. Also the head of the Treasury, María Jesús Montero. The economic vice president has even created a daily indicator to have data outside the INE. In general, the Government points out that the employment and collection figures are at record levels and show a recovery that is not reflected to the same extent in the INE statistics. Moreover, by having more employment but less GDP, consequently the figures are showing a sharp drop in productivity that would not make sense in a time of recovery: the logical thing would be for productivity to improve as activity recovers and because the companies that have survived are the most productive. Many experts consider that, in light of these data, the GDP numbers could be somewhat higher.
However, the statistical agency points out that inflation is taking its toll: although more is spent in euros, less is being bought in real volumes. It also remains to recover a part of foreign tourism and vehicle manufacturing. That is, important pillars of the economy that have not yet fully recovered. The population fell last year, necessarily affecting economic data. And the billing figures that the Bank of Spain has from the commercial registers indicate that the situation of the companies has not yet been restored, with numbers even worse than before the covid and very unequal by sectors and sizes.
Some specific facts could explain some of the discrepancies. For example, there has been an increase in the use of cards and online purchases that may have contributed to the rise of the underground economy. Inflation also explains part of the increase in collection. And these differences between GDP, income and employment are happening in all countries. The increase in part-time and hourly hiring could justify fewer hours worked even if employment rises. Also the use of ERTEs (temporary employment adjustments) or casualties due to covid, especially with the Ómicron variant. The increase in public employment subtracts some productivity because in GDP it is counted only as salary and does not include a margin for sales.
In any case, they are all partial explanations that do not fully and satisfactorily justify the existing gap between GDP, on the one hand, and employment and revenue, on the other. Furthermore, Spain is among the countries with the greatest discrepancy. Even so, various economists consulted consider that the INE has been calculating these numbers with technical criteria endorsed by Eurostat. Perhaps there is some room to adapt the standards and offer somewhat better figures. However, although the Government is somewhat right and it is very likely that later the INE technicians themselves may make upward revisions, the problem now, they point out, is that the body’s credibility may suffer. At a time when risk premiums have also begun to rise, experts stress that it is not good to cast a shadow of doubt on official statistics. The change in the leadership of the INE could be a shot in the foot.
On the contrary, government sources insist that the INE will be provided with more resources and possibilities to hire staff. They believe that there has been a decapitalization of INE staff in recent years. And they maintain that transparency must be added to the way the institution operates, opening the data to professionals and academics. The Ministry of Economy assures that there is an open process with several profiles to replace Rodríguez Poo. The most popular candidate is Israel Arroyo, Secretary of State for Social Security until last week, when he announced his resignation. He is a Social Security actuary and statistician with great prestige among economists. But even so, it would mean that for the first time a former senior government official would enter the institution.
As for the CPI, the INE has only been using the regulated rate to measure electricity prices. However, only 40% of households have contracted this rate, which is directly linked to daily wholesale prices and which has consequently been greatly affected by the rise in costs. The remaining 60% have the free rate, whose prices are negotiated with the companies and are usually somewhat more stable, although in the long run they are generally more expensive than the regulated rate. In other words, if the liberalized prices had been incorporated earlier, the inflation registered since last summer would probably have been lower. Hence, the Executive has insisted that this measurement be reviewed as soon as possible. Given this, the INE has argued that the companies did not provide them with the information to calculate it, arguing that they did not want their competition to know their prices. Another issue is that the free rate has yet to reflect the sharp increase in costs and, by incorporating it into the CPI, could cause it to climb even more in the coming months.
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