Spanish Economy Will Rise 1.5% Between 2014 And 2015

Spanish Economy Will Rise 1.5% Between 2014 And 2015

Spanish Economy Will Rise 1.5% Between 2014 And 2015

Spain’s economy is on course to achieve a sustained recovery and clock up average growth rates of 1.5 per cent between 2014 and 2015, Economy Minister Luis de Guindos said last month. This is no mean feat considering the Eurozone’s fourth-largest economy just recently exited a two-year recession which has destroyed millions of jobs and left it with one of the largest budget shortfalls in the region. But the government’s upbeat outlook is backed by strong economic data which could prompt an upward revision to the official 2014 growth forecast of 1 per cent. This is already higher than the initial estimate of 0.7 per cent.

So what are the some of the reasons to be cheerful about Spain? Here are a few:
• Strong export growth
• A gradual return of foreign investment
• Expectations for job creation both this year and next

INCREASED COMPETITIVENESS BOOSTS EXPORTS

Spain has become an exports powerhouse, redirecting its production away from a home market battered by the economic crisis to the international community. In 2013, exports to Europe rose 4.3 per cent from a year earlier, compared with falls registered by peers like France, Germany and Italy.

A decline in labour unit costs and contained wage rises has contributed to making companies more flexible and competitive. A recovery in the services sector in the first months of 2014 has also been good for exports. Exports accounted for 33 per cent of Spain’s gross domestic product (GDP) in 2013, up from 17 per cent in 2007, with the automotive and heavy goods industries as star performers. The government’s forecast is for exports to contribute 1 percentage point to GDP growth in 2014.

DOMESTIC DEMAND, JOB CREATION STILL LAG

Wide-ranging government reforms have helped pull Spain out of the doldrums, but headwinds remain as domestic demand is still sluggish and unemployment high. Recent retail sales data has shown that Spaniards are still feeling the pinch and that there is little perception of a real recovery on the streets. And while there is traditionally a lag between economic growth and job creation, the employment opportunities promised by the Economy Minister will be vital to ensure a sustainable recovery. Spain had only one job vacancy for every 110 jobseekers in the final quarter of 2013, according to the latest labour market bulletin from employment agency Asempleo and financial consultants Afi.

But it’s not all bad news! The ratio of unemployed people to job openings shrank by 17 per cent from the final three months of 2012. So the labour market reform is bearing fruit! Reducing Spain’s joblessness to normal levels will not happen quickly, but the job openings created from now on will not be nearly all temporary as in past years – a positive development.

If you’re interested in investing in Spain, contact corporate law firm Argali Abogados.

Leave a Reply