Some industrial production/GDP charts Madrid better watches

2012 12 37

2012 12 42

Spain’s index of industrial production lost 11.7 percent year on year last September. In order to see what this means, I’ve brought here the index’ annual rates and GDP variations: it is ease to spot the similar pattern between them, even though industrial production changes are much wider.

When at the peak of the recession the GDP fell 4.76 percent, industrial production dropped 22.5 percent. But the dynamics are clear, the country is headed towards a sizeable recession, closer to -2 percent than to that -0.5 percent forecast by the government for 2013, the year in which recovery would be showing up. According to the data available, retail sales could decrease, too, by a staggering -8%–as reflected in the third chart above.

To sum it up, both production and consumption are quite dramatically losing steam, as it were, because banking credit and finance have all but vanished. Figures are September’s and are in sync with GDP evolution.

Madrid is confident that external trade almost alone can make the economy to revive. In truth, the Spanish economy is adjusting, but so the are the markets in general. Some corrections are automatic and some aren’t, so it is fair to say that Spain still has economic muscle to make those adjustments. So much so that the process could have been speeded up to Irish levels. The problem is that the Spanish sectors suffer from hugely inefficient regulation.

The government is excessively optimistic. Yet, it isn’t a matter of ignorance, but of risk.

About the Author

Miguel Navascués
Miguel Navascués has worked as an economist at the Bank of Spain for 30 years, and focuses on international and monetary economics. He blogs in Spanish at: http://

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