An improvement in lending and the launch of the ECB´s QE programme are factors that have led to an improvement in consumer confidence across Europe, with the latest data showing that sentiment is at its highest level since September 2007.
Last week´s release of Spain´s consumer confidence survey offered further indication that Spaniards feel that the economy is getting back on track. Perhaps even more significantly, they now feel secure enough to start spending again.
Spain currently has the best PMI rating in Europe, and last year posted GDP growth which was ahead of core countries such as France and Germany. Indeed, the Government was at the ready with more good news last week, with Minister for Industry, Energy and Tourism, Jose Manuel Soria, predicting growth of 2.5% growth for this year. That figure is somewhat higher than the figure predicted by analysts at Bankinter (2.2%), but then again, this is an election year.Belen San Jose, financial markets analyst at Bankinter, says there are a number of concurrent factors contributing the upturn in fortunes:
“Consumer confidence in Spain is high and is largely down to the drop in the oil price because it provides families with more disposable income to spend. It is a factor to consider but I do not think it’s crucial.”
Ms San Jose believes that Spain´s stock has gone up internationally for the manner in which it has tackled grave difficulties over the past number of years:
“Factors helping this sentiment is an internationally recognized good standing, a perception that the country is now less unstable, and particularly the perception that the worst has passed. We must bear in mind that much of the spending that had been stopped by the uncertainty of the crisis in the corporate sector and households are, little by little, returning to the real economy.”
In addition, latest figures show spending by Spanish industry on energy has increased by 5% year-on-year, offering a further indication that the economy is stirring from its slumber. With so many positive indicators, one could be forgiven for thinking everything was rosy again in the Spanish economy. Unfortunately, the looming cloud of high unemployment continues to cast a shadow over the country.
“To finish the bottleneck in the Spanish economy, we need to address the high rates of unemployment. While the figure of those out of work remains as high as it is, the economic and social cost will continue to be a drag on the real economy. To date, we have seen reforms implemented that have favoured dismissals, but as yet, very few for recruitment. A more active policy commitment in this area is definitely required and would help us reverse the economic situation,” Ms San Jose added.