The Davos forum alert from the main risks for Spain: prolonged economic stagnation and employment crisis and debt

The World Economic Forum, also known as Davos Forum, has identified five main threats to the Spanish economy in 2022: the Employment and Demography crisis, prol

The Davos forum alert from the main risks for Spain: prolonged economic stagnation and employment crisis and debt

The World Economic Forum, also known as Davos Forum, has identified five main threats to the Spanish economy in 2022: the Employment and Demography crisis, prolonged economic stagnation, the debt crisis, the possible failure of climate action and a Potential fracture of internal political relationships.

This is included in the seventeenth edition of the Global Risk Report, published on Tuesday, and that collects the main risks for the world economy in 2022, still marked by the challenges that the pandemic continues to assume.

"The Covid and its economic and social consequences continue to assume a critical threat to the world. Inequality in vaccination and the irregular resulting economic recovery implies social fractures and geopolitical tensions. In the 52 poorest countries in the world - which host 20% Of the world population - only 6% of the population has been vaccinated, "they point out as a main idea.

In the case of Spain, which can be presumed from a vaccination rate of 80.2% (people with full pattern on the total population), the highest in Europe, the main challenges are of a social and economic type.

The demographic and employment crisis is the first risk identified for Spain, of a social type. Specifically, the Forum notifies that "a structural deterioration of the prospects for employment and / or the standards of life of the age of working due to unemployment, underemployment, low wages, precarious contracts, erosion of the Labor rights, etc. ".

Spain is the only European country, along with Montenegro and Turkey, for which the labor market is the first threat. It is also for countries such as Angola, Bangladesh, Bolivia, Botswana, Brunei, Cameroon, Cape Verde, Colombia, Congo, Ghana, Iran, Kazakhstan, Kenya, Kyrgyzstan, Mali, Namibia, Nepal, Rwanda, Senegal, Sierra Leone and Zambia.

Economic stagnation for a long period of time is the second danger facing Spain, of an economic type, and refers to the possibility of there is "GDP growth close to zero or very slow economic growth that lasts many years" .

A potential debt crisis is one of the threats that loom over the whole world, according to the forum, and specifically about Spain. "Public or private finances exceeded by debt accumulation give rise to massive bankruptcy, default, insolvency, liquidity crisis or sovereign debt crisis," explain. Something that threatens the world as a whole and to us in particular.

"The debt crises are a critical threat in the short and medium term and one of the risks that could be more severe over the next decade. The excess debt will make it more difficult for countries to deal with the economic impact of the Covid and finance a socially just transition, "point.

Countries now present public debt rates on much higher GDP than before the pandemic for the fiscal efforts they have had to make in 2020 and 2021 to alleviate the impact of the Covid in the economy.

As collected in the report, the most critical point of debt will come within three and five years. During the worst moments of the pandemic, "the stimulus of governments was vital to protect income, preserve work and keep companies afloat, but debt levels are high now and public budgets will have to narrow after the pandemic, despite They need to finance the green and just transition. "

At the end of the third quarter of 2021-last data available-, Spain presented a level of debt over GDP of 122.1%, according to the Bank of Spain, the equivalent of 1,432 billion euros.

Therefore, therefore, well above the recommended level of 60% of GDP according to the tax standards of the EU Stability and Growth Pact, which is now suspended and will be reviewed predibly before returning to vigor.

For the 2021 as a whole, the supervisor expects public debt on GDP in Spain to stay at 120.4%, and that at 2022 lower up to 115.7%.

Given the level of indebtedness, the Independent Fiscal Responsibility Authority (AIRF) has already warned that two decades will be there more so that the level of debt on GDP returns to prepandemic levels, hence also the concern of the World Economic Forum.

The last two risks detected for Spain are a possible failure of climate action - which is also identified as the first problem for the long-term world and the second in the short term for the United States - and an internal political fracture in the country.

The first is based on the distrust that the world has the ability to contain climate change; While the second, understood as a geopolitical type, talks about the possibility that "economic, political and / or technological rivalries between different geopolitical powers result in a fracture of bilateral relations and / or tensions for growth."

Updated Date: 11 January 2022, 19:55

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