Spain Prudently Pulls Out of Recession

The budding symptoms of improvement in Europe are quite reassuring. The progress of some economic indicators (especially those of trust and activity) will allow this positive momentum to materialise in the last quarter of the year and in early 2014. In the case of Spain, it keeps moving forward the correction of imbalances, and global markets recognize its worth. Step by step, the international perception of the Spanish economy is improving, and even excels that of Italy’s. That is why Mariano Rajoy’s government raised their growth forecasts from 0.5% to 0.7%.

The General State Budget project will be discussed by the end of this week, and will definitely have a more optimistic cut. Nonetheless, despite the positive forecasts, the Spanish government is still prudent, so they estimate an increase of 0.7% -just two-tenths of a point more than previously expected. Experts from Bankinter Broker consider that this change may look “petty” but if it indeed comes true, “it will become a milestone for Spain, because the country will change from always-negative reviews of their economy, to positive ones.”

Along the same lines, Spanish Minister of Economy and Competitiveness Luis de Guindos said in early September:

Spain’s economy will show clearly the quality of the policies implemented by the Government and also those carried out in the Eurozone.

He also said that his officials were “slightly” revising the 2014 growth forecast up from the current 0.5 percent projection. “We are much more confident than we were six months ago,” the Spanish Minister told the Financial Times in an interview, adding that he expected the Spanish economy to emerge from recession in the current quarter.

So it is more than evident that they finally managed to raise their numbers even if slightly. However, Spain now faces a long period of more austerity and harsh adjustments. (…) The task now is to achieve a vigorous recovery that allows us to create jobs.” Spain is out of recession but not out of the crisis,” PM Rajoy said in an interview with The Wall Street Journal, cautiously touting the effects of budgetary and structural overhauls.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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