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.
According to forecasts from The Organisation for Economic Co-operation and Development (OECD), Spain’s labour market will be amongst the top performers in the “Club of the rich countries,” registering the biggest advance in terms of employment in 2016 and overcoming the negative trend seen during the crisis. The international institution warns that a new recession could take Spain by surprise without having recovered all the jobs lost in the crisis.
The number of unemployed people registered with Spain’s Employment Office fell by 124,349 in June from May to 3.767.054. The decline in relative terms was 3.2% and is the second largest in historical series, only beaten by the fall recorded in June 2013.
Spain still has not a one 1 billion dollars tech company but the financing of high-growth, high-potential and mostly early stage firms shows a persistent positive evolution in Spain as shown by the report Startup Financing in Spain in 2015 published by Webcapitalriesgo.com.
Today, the economic situation in Venezuela has greatly changed for the worse, but those who had money have held on to it and now Spain has become the destination for this private capital. The investments are usually focused on buying top quality housing, mainly in Madrid, or on acquiring stakes in a select group of businesses with reasonable returns.
Eight years after the real estate bubble officially burst, all the existing indicators point to the sector’s crisis being over, although there are still some loose ends and some kind of legacy, such as the banking sector’s non-performing loans. But the data shows we can definitively put behind us an enormous problem which was a threat for the economic system for too long.
Yesterday Spaniards voted again six months after the last general elections on proposals which had changed very little; the only relevant novelty was the integration of Izquierda Unida (IU) and Podemos which in the end turned out to be irrelevant. The new/old left has not gained anything obtaining the same number of seats and votes as in December, when IU ran on its own.
Spain’s conservative People’s Party (PP) has won Sunday’s repeat general elections with 33% of votes and 137 seats. The Socialist party came second with 85 seats, while the coalition Unidos Podemos obtained an upsetting result of 71 seats and third position. Finally Ciudadanos obtained 32. These results came as a surpise as the polls had pointed to a very different outcome. But they provide an opportunity to break six months of political deadlock.
Today voters will decide which parties have a chance to decide Spain’s future government. The latest opinion polls show the right-wing Partido Popular winning the elections but in need of a helping hand from the Socialists to secure enough backing. The leftist movement Podemos emerges second in the people’s choice, with the potential to seize power if it forges a coalition with the Socialists. So once again, social democrats hold the key to government. An uneasy prospect as supporting others might wreck their future standing.
In the last few years, Spain has halved its deficit and emerged from a recession and the threat of a bailout which could have pulled all the eurozone down with it. Furthermore, it is now one of the countries with the highest growth – when the rest of the eurozone is still dragging its feet eight years after the start of the crisis – and unemployment is trending lower. But while caretaker Economy Minister Luis de Guindos keeps repeating Spain may not be sanctioned for non-compliance with its deficit target, everything indicates this will happen at the beginning of July.