Experts are forecasting an unemployment rate of 15% in 2018, when it is estimated that Spain’s economy will have reached its GDP growth potential, so that figure could represent its structural jobless rate. This decline in the unemployment rate, the starting point of which was 26% at the lowest point in the economic cycle, is substantial. But it will still be high compared with other eurozone countries.
Car production in Spain rose 26.7% in September, as the country’s automotive plants assembled about 9,000 vehicles per day, their highest production level since April 2008.
Spain’s medium-sized banks are prime targets in the next expected round of sector consolidation. But these lenders need to improve their P&L accounts ahead of further integration.
Fernando Barciela | Passos Coelho won the elections in Portugal with 38.6% of the vote, but lost his majority in parliament. Even though he has been tasked with forming a new government, Portuguese left parties have adopted a pragmatic approach which makes an agreement between the Socialist Party, Communist Party and Bloco de Esquerda increasingly likely. For the time being, they have already appointed Eduardo Ferro Rodrigues, a socialist, as the President of the parliament.
Last week the Spanish banking sector began its third quarter results presentations, but analysts are going one step further and are already looking for indications ahead of 2016. The outlook is not wholly favourable if we take into account the factors affecting it on the downside.
The amount of unemployed people in Spain – the country’s biggest problem – fell below 5 million in the third quarter of the year, for the first time since 2011. The jobless rate dropped 1.19 percentage points to 21.18%, while the employment rate rose 1%. But the improvement is exclusively due to temporary work contracts.
Fernando Barciela | Spain has some abilities, which were inconceivable three decades ago. A position which has been achieved through our companies’ hard work,” says Regino Moranchel, former CEO of Indra, the leading Spanish technological company and one of the four most important European companies by stock market capitalisation.
Polls predict no party will command a comfortable majority in Spain after the generel elections in December. It is the first time this has happened in the new era of democracy. No one knows for sure what the plausible consequences might be, but you can bet they will cause undue damage to the economy.
A new round of mergers amongst Spanish banks could just be round the corner. The Bank of Spain has also added its voice to the market rumours, the “off the record” comments from bank directors and the warnings from international organisations about the sector’s delicate health.
The direct impact of the global slowdown in Spain is being offset by the positive indirect effects on private consumption. High GDP growth rates will be maintained in 2015 and 2016, but these will moderate progressively, with economic growth seen falling to 2.8% from 3.1% in 2015 as reported by Bank of Spain last week.