Euro zone’s economic forecasts for spring season’s will presumably flower. The European Comission reached a deal on Thursday to change the methodology for calculating the region’s structural public deficit. Modifications will be applied in next May report, so that figures are expected to appear improved, especially in peripheral countries.
The agreement can be considered a lifeline especially for Spain, Portugal and Ireland since it will help to calculate their natural rate of employment to a more adjusted extent. In the case of Spain, this variable currently stands at an overwhelming 23%. Therefore, Spain’s unemployment estimations would be reduced, and consequently structural deficit’s – 4.2% in 2014 and 5.8% next year, according to last Brussels’s forecasts-. Spain should reach budgetary balance’s goal of 0.5% by 2018.
The natural rate of unemployment is technically known as NAWRU (non-accelerating wage rate of unemployment in English). It measures the level of jobless people
in a country when prices and salaries’ increases are correctly anticipated.
“This gives some sort of “apocalyptic view” over Spanish economy’s state, JP Morgan’s said some weeks ago. Maybe economists at the EC “forgot to make some reasonable adjustments,”, they added.
At the end, political leaders have seemingly followed analysts’ recommendations.