Spain’s GDP growth rate in the first half of this year has been solid. In the second quarter, GDP expanded 0.7% quarter-on-quarter nearly in line with the 0.8% rise in the first quarter, translating into a 3.2% year-on-year increase. So overall, the balance for the first half of 2016 has been favourable. And the strong performance over this period means that it is very likely GDP growth will be close to 3% for the full-year. But there are downward risks for 2017.
Julius Baer Research | We share the view of Mario Draghi, President of the European Central Bank, that his ultra-accommodative monetary policy stance alone cannot push the eurozone economy out of its current weakness but needs to be complemented with fiscal impulses.
Summer’s here and so are seasonal contracts. The latest employment survey showed the jobless rate in Spain went down to 20% in Q2, its lowest level since the summer of 2010. And yet employment is still a heavy burden for Spaniards, Greece being the only EU country with a higher rate.
There has been an increasing reduction in the pricing of corporate loans in Spain. Currently loan pricing is at 2010 lows, according to the Bank of Spain’s May bulletin.
Last week the Council decided that Spain and Portugal’s recent efforts to reduce deficit were not enough. This lead to the two countries being fined, the first time this happens since the inception of the euro.
The trend in the variables observed indicates that the recovery of the Spanish economy continued during the first half of 2016. With nearly 80% of the information available for 2Q16, the MICABBVA model estimates that quarterly GDP growth (QoQ) will have completed one year at around 0.8%. If confirmed, this stabilisation in the pace of expansion would give an upward bias to the growth envisaged in BBVA-Research’s baseline scenario for 2016 (2.7%).
Politicians’ promises are always idle talk. This makes it difficult to understand why some analysts showed their surprise when the Spanish government announced a €6 Bn rise in corporate taxes in order to meet Brussels goals just two weeks after general elections. Leaving aside strictly electoral reasons, Mariano Rajoy’s government had solid arguments to hike the levy to firms: corporate taxes are the only ones which have not returned to 2007 levels, gains being reduced by half.
The Social Security’s pensions fund is emptying. And this is causing huge alarm amongst current and future pensioners who believe, incorrectly, that “there’s going to be no money left and one day they’ll tell us that there is no monthly payment.”
The European Court of Justice advocate general made public on Wednesday a detailed opinion from an advisers group on so-called floor clauses in Spanish mortgage contracts. This recommendation suggests the court should apply retroactively a “temporal limit” on the amounts banks will have to reimburse borrowers. Floor clauses were already declared unfair by Spanish Supreme Court in 2013 May.