Bank of Spain expects recovery plan and EU funds to boost annual GDP by up to 1.75%

HE Bank of Spain According to the projections of the Recovery, Transformation and Resilience Plan linked to the European Next Generation EU program that will bring some benefits to Spain € 69.5 billionIt will have a direct impact on GDP at an average of 1.15% per year over a five-year horizon, which could rise to 1.75% when the “drag effect” between sectors is taken into account.

This is expressed in the Bank of Spain’s article ‘The Recovery, Transformation and Resilience Plan and its macroeconomic effect in a sectoral perspective’. ‘particularly relevant’ interaction resulting from productivity gains in directly funded sectorsAs a supplier of intermediate inputs and capital goods, it will result in profits for customer sectors.

The monetary authority shows: estimated impacts are “heterogeneous” across business linesThe sectors that will benefit most from EU funds will be the construction sector due to infrastructure investments related to the ecological transition process, as well as those that depend on the digitalization process (information and communication or vocational and technical services).

“In any event, the estimated effects are based on the assumption of full availability and mobility of resources between different sectors,” says the Bank of Spain.

Informatics, education and construction are the sectors that benefit the most.

Regarding the direct effect, Only a few sectors benefit “significantly” from increased recovery plan funding; Among these, information, professional and educational services come to the fore.Given its key role in some components of the recovery plan, such as everything related to the energy rehabilitation of buildings and homes, the plan’s focus on the digital transformation and modernization of the construction sector as well as the economy.

However, the organization led by Pablo Hernández de Cos estimates that most industries are seeing their gross value added “significantly” increase, given the indirect effects through customer-supplier relationships.

In particular, due to the “positive drag effect” created by the expansion in the information and communication branch, professional services and administrative activities come to the fore as the sectors that benefit most from this channel.

For other industries such as manufacturing or construction, the main reason for these indirect effects is productivity growth in the transport sector.

Less impact due to lack of skilled workforce

However, the Bank of Spain warns. The existence of “rigidities” in product and labor markets can limit the necessary reallocation of resources between companies and sectors and therefore “significantly reduce the overall impact”.

For example, a shortage of skilled workers in certain sectors can reduce the estimated impact by about 25% to 1.75% to 1.3% of average GDP per year.

Finally, the Bank of Spain notes that the figures presented in this article do not allow quantitative measurement of the impact of the structural reforms envisaged in the recovery plan, but their role is “fundamental” given the conditionality of disbursement of funds to the United States. alignment with this reform agenda and identified milestones. “This metric represents a priority area of ​​work for the Bank of Spain,” he emphasizes.

Source: Informacion

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