Posts Tagged ‘Spanish language’

3290

It has been a drip drip of okay news on Spain. There’s nothing sensational; nothing yet to quieten the euro-sceptics, but enough to offer some hope.

The latest PMI for Spanish manufacturing from Markit hit 50 in June, which is the highest reading in 26 months, and suggests the sector is no longer contracting; rather it is now flat. Spain posted its first trade surplus ever in March, with exports rising 2.7 per cent, and finally Spanish unemployment fell in May, with 98,286 joining the Spanish work-force.

Okay, none of this data provides a reason for the bulls of the investment world to start charging all over the market bull rings. A reading of 50 for the PMI still suggests the economy was flat, ie not growing. Sure the balance of trade went positive, but the main reason for this was falling imports, and Spanish unemployment remains at frightening levels.

But then this week (July 23 to be precise) the latest figures on Spanish GDP were out and they gave some reason for cheer.

In Q2 the Spanish economy contracted by 0.1 per cent, after contracting 0.5 per cent in Q1 and by 0.8 per cent in Q4 last year. Year on year growth was minus 1.8 per cent.

So Spain is still in recession, but it needs only a very modest improvement to leave recession and that surely has to be celebrated.

Ben May, European economist from Capital Economics, is not so sure, however. He said: “We expect weak demand in Spain’s major export destinations to mean that the boost from the external sector will fade over the coming quarters. And with the fiscal squeeze, housing slump and private sector deleveraging set to continue for some time to come, domestic demand is likely to contract significantly further.

Based on this, we still expect GDP to fall pretty sharply next year, perhaps by as much as 1.5 per cent.” If Capital Economics is right, and the recent good(ish) news proves to be a one-off, then expect another bond crisis, and more calls for help in 2014-15.

© Investment & Business News 2013

Twenty seven per cent! For those under 25, the unemployment rate is 57 per cent. These are staggering numbers. Spain’s government debt is out of control, not because it is wasting money, but because so few of its workforce have jobs.

Yesterday saw data on Spanish and French labour markets. The data on France was awful when measured by any normal yard stick, but in comparison to Spain it was positively brimming with optimism.

French unemployment is, in fact, now 3.2 million, compared with 6.2 million in Spain. In the UK unemployment is 7.9 per cent, or 2.56 million.

We keep hearing about how the Eurozone is slowly recovering, not that this is showing up in the data on GDP; that we just need to give the region time; that green shoots are everywhere. But look at the job stats.

Don’t compare the adjustment occurring in Spain with the UK experience under Mrs Thatcher. The Spanish experience is worse by a substantial order of magnitude.

There are structural problems with the Spanish economy – that is for sure. But what Spain, along with Greece, Portugal and the rest of the motley crew needs is massive investment.

By all means impose austerity on sectors of the respective economies. But other sectors must be recipients of a latter day Marshall Plan, or the consequences for democracy and peace in Europe will be dire.