Markets woke up on Monday to find the Spanish and Italian risk premium almost hand in hand. Now, the difference is of barely 2 basis points. With these data, experts from Mirabaud are more optimistic about the situation of the Spanish economy. “The main leading indicators show that the macroeconomic recovery gathers pace; besides, there are positive signs in the foreign sector.” Even the private consumption and the unemployment rate –which are the major weaknesses of Spain’s economy, show an improvement.
As a matter of fact, many international investors have turned their focus back to the Spanish public debt, despite the high instability of the peripheral countries. Mirabaud analysts believe “the Spanish situation contrasts with that of other European nations”, because “while Spain is getting better, the other peripheral countries continue to deteriorate.” After all, Portugal’s public debt is so delicate that it may prevent its access to the markets in 2014. If so, the country would need a second bailout. Greece and Italy are also going through difficult times both in economy and in politics.
Be that as it may, the fiscal situation is not so clear in Spain. Mirabaud experts warn “the safety net provided by the European Central Bank and the macroeconomic improvement have helped Spain to reduce its risk premium, and also to secure a comfortable funding so far this year.” The problem is that “Spanish politicians have not used this opportunity to implement structural reforms that would provide a sustainable fiscal structure.” It is about time for them to grasp the nettle and do whatever is needed to return to economic growth.