The International Monetary Fund (IMF)’s spring forecasts – progressively less optimistic – have nurtured the tragic sense of life (the theory expounded by Spain’s Miguel de Unamuno) or the Spanish art of flagellation. Or at least that is what the media headlines reflected, despite the fact that international observers were incapable of detecting any particularly destructive tone in the Washington-based organisation’s predictions.
It’s unheard of Spain’s tourism sector, which many experts said was stagnant and mature ten years ago, has not only massively recovered but continues to beat records from one year to the next in terms of numbers of international tourist arrivals. Since it touched bottom in 2009, with 52.2 million foreign tourists, the sector has not stopped growing any year. In 2015, numbers reached 65 million, up 31% in comparative terms.
Data from the Bank of Spain illustrates a turning point in the accounts of non-financial companies in 2015. That said, against the backdrop of political uncertainty there is a risk that the value of this will not be unlocked so that Spanish companies can face the current challenge of increasing their size.
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.
It’s straight out of the textbook that low inflation – and above all deflation – has negative effects on economic growth that we all know about. That’s the main reason why ECB President Mario Draghi implemented an ambitious set of monetary expansion measures in March, with the aim of boosting prices to a level more suitable for economic growth, namely 2%.
Maximising profits is the main objective of any company and the banks are not alien to this situation. The current scenario is particulary challenging for the profitability adjustment of the sector in Europe and the adjustments made by the Spanish banks are proof of this.
Public investment grew 21% to 26.545 billion euros last year, according to data corresponding to end-2015. This was the first increase since 2009. It accounted for 2.5% of GDP in 2015. The autonomous regional governments were the ones which saw the most investment and the biggest year-on-year rise.
F. Barciela/ F. G. Ljubetic | Labour costs in Spain stagnated during the crisis, but the idea that they eventually have to rise again has quite a few supporteres, including many businessmen. It would even be a postive driver for consumption and the economy general.
Ofelia Marín-Lozano | Spain’s public deficit stood at 5.18% of GDP, missing the target set by Brussels (4.2%) by one percentage point. So the deficit should not be higher than nominal GDP growth, which can be estimated at around 3% in the long term.
In the early years of the crisis, Spain’s capital markets and banks suffered severe financing restrictions, but since then access to funding has been slowly re-established for big companies, as well as for SMEs and families. And analysts believe this is now functioning normally.