Economy 2021: a disruptive year for the world economy

Spain began 2021 chilled with cold because of the storm Filomena. The unusual drop in temperatures caused an increase in energy demand that led to a sharp rise in electricity prices. At the time it seemed somewhat circumstantial. Thus, at the beginning of last year and because of the snow we began to talk about one of the recurring themes of 2021: electricity prices.

Madrid: In the last quarter of 2020 we published in The Conversation Spain Welcome to the era of disorder. In that text, Professor Jorge Hernando Cuado, from Nebrija University, broke down some of the events that were expected to bring instability to world order and the world economy. It is clear that, indeed, chaos has been present at many levels in the year that now ends.

Energy and prices

Spain began 2021 chilled with cold because of the storm Filomena. The unusual drop in temperatures caused an increase in energy demand that led to a sharp rise in electricity prices. At the time it seemed somewhat circumstantial. Thus, at the beginning of last year and because of the snow we began to talk about one of the recurring themes of 2021: electricity prices. Researchers Escamilla, Snchez Martnez and Tilocca, from the University of Seville, explained to us in Why does the price of electricity change so much in Spain? the factors that act in the Spanish energy market to set electricity prices.

Then, in the middle of the year, the Government made changes in the calculation of the electricity bill that Professor Jos Luis Sancha, from the Universidad Pontificia Comillas, explained to us in the electricity bill in the free market: Are you overcharging my marketer? And, in Myths around the price of electricity: should renewables be the only bet? , Professor Jos Guillermo Snchez Len (USAL) analyzed the management of the electricity market and the factors that could help (or not) to lower prices. Gas is one of the main sources of energy for electricity production and this year there have been many factors influencing the rise in its prices. Some go beyond the economy and are interwoven with geopolitical reasons, as explained by Professor Luis Velasco, from the University of Malaga, in his article Geopolitics in the boiler: what is happening with gas in Europe?. As the months go by, the conjunctural imbalance seems more structural: what a year ago was paid at 39.51 / MWh today is paid at 358.06 / MWh.

Debt and inflation

The upward trend in global debt and the return of inflation after years of price suppression were other threats looming over the global economy at the end of 2020. Today we know that global debt has reached values never seen before. According to the latest update of the IMF database , in 2020 it reached 256% of world GDP (226 trillion dollars). And growing. In line with this fact, in their article Public debt, odious debt and coronavirus: Lessons from history, the professors of Economic History of the ULPGC Daniel Castillo Hidalgo and Sergio Ferri Solbes review some moments in history in which the public debt has had an important weight.

At the end of the summer, Professor Francisco del Olmo Garca from the University of Alcal explained how, in the new academic year , the evolution of prices should be carefully followed: The fact that the inflation rate is positive is not so worrying like the speed with which it is reaching relatively high levels , he pointed out. The truth is that in October and November they had a year-on-year rise above 5% when in February of this year the percentage had been 0%.

Turning around with inflation, Professor Rubn Garrido-Yserte (UAH) analyzed in Storm clouds on the horizon: prices rise 5.5% in the Spanish economic outlook, after the INE's announcement of the October price hike. Since June 2008 similar figures were not seen (then it was 5%). These increases coincide with changes in the monetary strategy of the European Central Bank. Mara Nieves Garca Santos (IE University) explains in The new monetary policy of the European Central Bank will allow periods of inflation that, with the new inflation objective of 2% in the medium term , there may be temporary temporary deviations. This would help stabilize the inflation expectations of economic agents, something essential for the proper functioning of financial markets.

Other lessons learned

This year we discovered the importance of well-functioning supply chains for the good performance of the global economy. Between March 23 and 29, the grounding of a mega-ship kept the Suez Canal closed , which caused the paralysis of logistics chains and the rise in oil. From there we learned the tremendous economic weight of the invisible maritime transport industry: a hyper-concentrated and therefore powerful sector , which moves 80% of world trade. In Transport by sea, a key element in the global logistics jam , Professors Rafael Villa and Toms Martn (UCJC) explained the reasons for the logistics crisis and the characteristics of the sector.

On December 19, 2020 , a bitcoin was worth 23,874.50 USD euros, on January 8 a bitcoin was already 40,675.80 USD and on December 19, 2021, 46,683.80 USD (on November 8 it reached the price record of $ 67,582.60). This shows us the extreme volatility (for the most diverse causes) of cryptocurrencies , which are also tremendously attractive to young people and must be regulated as soon as possible.

Labor and social rights

In 2021 we have also talked about labor rights and social protection. Of what has been achieved and what is yet to be achieved.

Pensions

Emilio Jos Gonzlez Gonzlez (Comillas), Mara Gema Quintero (UC3M), Gayle Allard (IE University) and Santos Miguel Ruesga (UAM) have analyzed the Spanish pension system and its deficiencies, the importance of social dialogue for its reform, to slow down spending with options such as extending the retirement age, all in order to guarantee citizens economic sufficiency in their old age.

The minimum interprofessional wage

The SMI ends the year at 965 euros, after the Council of Ministers approved an increase of 15 euros at the end of September. Roberto Fernndez (University of Len) and Marta Fernndez (University of Vigo) explain the improvements brought about by this rise, which seems scarce, to the most vulnerable workers.

The minimum vital income

Spain closes 2021 having approved the Minimum Vital Income Law , which began at the end of May 2020 as Royal Decree Law 20/2020 . In May of this year, Professor Nuria Reche Tello (Miguel Hernndez University) analyzed the effects of the application of this measure after one year of its implementation. For her part, Professor Henar lvarez (University of Len) analyzed the reasons that made it necessary to apply it as a tool to alleviate poverty in Spain. In defending its approval in Congress, the Government indicates that "in this way the regulation concludes the parliamentary process, certifying the legal security of the regulation." And Professor Mara Garrote (UCM) talks about this right in her article Legal security: what is it and what is it for?

What remains to be achieved

We have also realized what remains to be done to dignify work in Spain. Professor Beln Alonso-Olea (UNED) talks to us about domestic employment , a sector that tends to be precarious and submerged and to which one of the most vulnerable labor groups seems to be working: migrant women. Spain has not yet acceded to ILO Convention 189 for decent work in domestic employment, which proposes that working conditions be no less favorable than those applied to other workers. This would finally give them access to unemployment benefit. And also, we were waiting to tell how the dialogue between the Government, the employer's association and the unions for the labor reform closed (Vanessa Izquierdo, Nebrija University). Stories that will continue the year that we are about to begin.

(Written by Hamish McCallum, Director, Centre for Planetary Health and Food Security, Griffith University, as appeared in The Conversation)