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ECONOMY| 2021.01.27

“The evolution of the pandemic casts new doubt as to its impact on the economy”

Alberto Matellán

Alberto Matellán

Investors have expressed doubts at recent meetings — doubts that are reasonable given how the pandemic is evolving. That’s the view of Alberto Matellán, Chief Economist at MAPFRE Inversión. In his weekly interview with Radio Intereconomía, he outlined the three factors that he believes are underpinning the prevailing cautiousness at present. Firstly, liquidity has dropped at the beginning of the year. Secondly, agents believe that inflation will rise. But the foremost issue for Matellán is the way the pandemic is evolving. That’s because, while the first two factors can be reversed, “the evolution of the pandemic is casting new doubts as we do not know what impact it will have on the economy.”

Against this backdrop the vaccine certainly helps, but it will not necessarily be the main economic catalyst. As Matellán recalled, in November the economy began to function again despite the ongoing pandemic, and in the last quarter we even saw the economy start to accelerate. In that regard, “the key will be not so much the vaccine but the evolution of the pandemic itself.”

Indeed, it is in this context of uncertainty that the International Monetary Fund further revised its forecasts. It now foresees that the Spanish economy will grow by 5.9 percent. According to Matellán, this estimate is in line with the market consensus and chimes with the MAPFRE Economics forecast that Spain’s economy will grow by 6.1 percent this fiscal year. “While forecasts are certainly being lowered, it’s also going to be a better year than expected despite an accelerating pandemic,” the economist added.

Even so, levels of consumer and business confidence already presage a somewhat pessimistic outlook. In this sense, Matellán commented that consumer confidence is strongly influenced by the raw information that is released following specific events. In other words, “the information isn’t filtered through a process of reflection, as is done by analysts, for instance.” And, on reflection, these data are bleak, but not as bad as confidence data would suggest.

In fact, Matellán’s main advice to investors is to reflect. “Look at whether the information you are receiving actually impacts upon the goals you have set yourself personally. If not, keep those investments in the hands of a good adviser and don’t get caught up in the vagaries of the market,” he concluded.