September 8, 2020
Public deficit latest publications
The economic package reinforces the signal of fiscal discipline by establishing a primary balance of 0% of GDP. It is positive that the federal government has proposed that goal instead of the deficit of 0.6% of GDP that it had suggested in Pre-Criteria for 2021.
The public deficit deterioration will be greater than expected three months ago. In an unprecedented crisis, the sustainability of public debt could be compromised.
This report analyzes the ways to finance this round of fiscal stimulus package and responds to the recent debate of fiscal deficit monetization. The report also makes policy suggestions to maintain Chinese public debt level and financial stability in the long term.
Twenty years ago, the Spanish economy started its journey into the 21st century after joining the eurozone in 1999. Since then, Spain has faced two economic expansions and two intense crises of a very different nature, with important consequences for economic policy.
Spanish public finances are not in the best position to face this crisis. Since 2015, policies to reduce taxes and increase expenditure have impaired the fiscal structural balance.
COVID-19 is pushing the world economy toward a deep recession that could endure in the long-term. To support the economy, the Chinese authorities have approved various fiscal and monetary policy tools that are suited to the current circumstances.
This report analyzes the possible monetary and fiscal policy tools in front of the global economic recession led by COVID-19. We believe that fiscal policy should play a leading role. Regarding monetary easing, the interest rate cut progress should be more conservative while liquidity management should be enhanced.
In this Economic Watch we present different growth scenarios for the Spanish economy in 2020 under diverse assumptions and hypotheses, and evaluate the potential effects of the economic policy measures recently adopted by the Spanish government to mitigate the economic consequences of COVID-19.