Article published by Mr. José Carlos Francisco in La Gaveta Económica in the October 2015 issue.
In my analysis last month, I ended by writing that the economic outlook was only overshadowed by the slowdown in China, the Catalan elections and the General Elections in Spain. Well, China will indeed grow less than 7%, but will continue to maintain a much higher rate than Western economies (2% compared to 6% probably). In any case, the effect of the Chinese problems for the Canary Islands will not be too important and will always be in the third or fourth derivative.
The Catalan elections and their results have had a positive assessment in the markets and, far from adding turbulence, they have reassured international analysts. It is also true that the formation of a Government is complicated and it is already said that it is very possible that it will be postponed until early 2016, that is, after the General Elections. The latter suggest a coalition government, probably with “Ciudadanos” in it, which would be a novelty in our recent history.
The State Budgets are on the table and those of the Canarian Community are being prepared in the kitchen. Regarding the latter, it is worth noting that the macroeconomic picture should estimate regional GDP growth of around 2.8%, job creation of 25,000 full-time jobs and inflation close to 1%.
Unfortunately, for the public accounts and in our opinion, the Canarian Government, pressured by the extra payments of civil servants, the return of the “Moscoso” days and the pressure to improve public services, will not have room to “touch” taxes, maximum when the “spending rule” prevents any fickleness in this sense. The President and the Counselor have referred to 2018 as the year of downward tax adjustment. In our opinion, if things go better than expected, it is possible that 2017 will allow room for tax reductions, but otherwise it would be too early.
For things to go “better than expected”, which could be 2.8% (in 2016) and 2.5% (in 2017), it is necessary to simplify, reduce and streamline the legislation of the territory that impacts economic activities and for the winds that push the economy of the Archipelago to continue blowing: Oil and low interest rates.
U!
