Last night, the leaders of the Ciudadanos and Podemos emerging parties joined forces to deliver a scathing bashing to the Socialist candidate during the debate held as a foretaste of the Spanish General Elections on December 20th. Spanish Prime Minister Rajoy judiciously declined the invitation to assist at the expected slaughtering.
The picture of the Spanish economy is changing thanks to the international activities of its companies, which has been increasing since the end of last year. Those firms which already operate overseas are expanding their business, but there is a risk that the uptick in domestic demand could dissuade new companies from leaving their home market.
The National Statistics Institute published last Thursday the breakdown of third quarter GDP, which has been estimated as having grown 0.8% in the quarter (3.4% year-on-year). This data once again stands out in the euro area, despite the fact it implies a deceleration from the 1% registered in the previous quarter. But key analysts believe that good short-term results should not cloud the fact that there are still areas of Spain’s economy which need to be improved.
The political risk in Spain is a totum revolutum, where even the analysts cannot agree on what factor carries the most weight: either the Catalan secession process, the appearance on the scene of a political force like Podemos or the possibility that the delicate balance acheived through the timid reforms implemented by Rajoy’s government could be destroyed.
The chairman of CLH, Spain’s leading petroleum products’ storage and transport company, recently made the comment that the demand for fuels “is increasing as never before,” around 4-5%, compared with a decline of a similar amount during the crisis years.
The Industry Ministry revealed that the tariff surplus for 2014 will be over €600 million (the result of the last available liquidation, number 14, was a €460 million deficit).
Despite the fact that many of the banking sector ratios are improving, the Bank of Spain in its November bulletin has once again called on the industry to adjust its business model and even adapt its corporate strategy to a demanding economic and regulatory environment.
The day after Draghi warned about greater than expected weakness in Eurozone inflation data, Spain’s final October inflation number has been published, confirming the -0.7% year-on-year preliminary figure. But despite the fact inflation remains in negative territory, the CPI rose 0.6% month-on-month.
The Financial Stability Board (FSB) announced yesterday that it has removed BBVA from its list of 30 global systemically important banks. Spain’s second biggest entity has been included in this list since 2012. But the lender will still be subject to other loss-absorbing capacity obligations, such as Minimum Requirement for Own Funds and Eligible Liabilities (MREL).
Popular chairman Angel Ron’s proposal to raise salaries in line with productivity in order to speed up the consolidation of economic growth is clearly at least worthy of a discussion. In the short-term, it would have repercussions not only on corporate profits but also on improving confidence, the recovery in consumption, the increase in production and job creation.