Rafael Domenech (BBVA Research) | Since 2014, Spain has been growing at rates higher than those of most other European countries. During these years, Spain has recovered the competitiveness lost before the crisis.
In Spain today all eyes will be on the voting on the no-confidence motion which we expect will be successful. Unless current Prime Minister Mariano Rajoy decides to resign ahead of the vote. So everything points to PSOE leader, Pedro Sánchez, becoming the new Prime Minister. It looks like he will not propose new elections immediately, which we believe will prolong the political instability in the country.
Spain’s economic growth has only just begun. According to Morgan Stanley’s macroeconomists, the last Spanish cycles have lasted increasingly longer, from ’82 to ’93 and from ’94 to ‘2013.
J.L.M. Campuzano (Spanish Banking Association) | The Spanish economy’s financing capacity compared with the rest of the world stood at 8.943 billion euros in the fourth quarter, representing 3.1% of GDP. For the year as a whole, the financing capacity was 22.752 billion euros, 2% of GDP.
J.L. M. Campuzano (Spanish Banking Association) | The Spanish economy’s deleveraging process is still ongoing. But the data for Q3 shows different trends in financing capacity depending on the sector.
Since the beginning of 2014, the Spanish economy has been recovering from a very tough crisis – unemployment jumped from 8% in 2008 to 26% at the start of 2014 and has now fallen to 18.9%. This is in part thanks to the ECB’s extremely expansionary monetary policy and low interest rates. Now after Donald Trump’s victory, everything could become unstable.
The PSOE “barons” rebellion against party leader Pedro Sanchez represents an internal power struggle. A national issue. Sanchez has been replaced by an interim executive committe headed by Javier Fernandez. Sanchez had a strategy worked out.
Spain’s caretaker Prime Minister Mariano Rajoy will this afternoon make his investiture speech to parliament, ahead of a key vote on Wednesday to secure support for his conservative Popular Party to form a new government. The PP have already brokered an agreement for breaking the current political deadlock with centre-right party Ciudadanos, led by Catalonian lawyer Alber Rivera. As a result, Rajoy can probably rely on the support of 170 MPs. But he needs 176 votes (out of a total of 350) if the PP is to win an absolute majority.
In the next quarter and the following one, we will obviously see an uptick in growth because of the tourist season. But after that, we will see a more marked slowdown, for a variety of reasons, with the first one being the impact of Brexit. But if this is going to lead to recession, I don’t know. I don’t have a crystal ball, but I don’t rule it out.
The government has raised its deficit forecast for this year to 3.6%, thus failing to comply with the objective agreed with the European Commission (2.8%). But Guindos is confident that the Spanish economy will be able to apply an adjustment equivalent to 1.4 percentage points of GDP, over 14 billion euros. But the experts do not believe that the economy can deal with such a large adjustment.