Morgan Stanley: “Is already Spain the new Germany?”

In the case of Spain, they increased the GDP growth forecasts in 2014 from 1% to 1.2% and from 1.5% to 2% in 2015. Spain positions itself then among the countries with the strongest growth in Europe in 2015. Regarding the so-called “Core Europe” (Germany and France), they stop offering the highest growths and give way to the periphery and considerably to Spain, say Morgan Stanley experts.

The improvement in the external environment is crucial to raise their forecasts. Thus, these analysts take into account some more favourable financial conditions (lower bond yields, the weakness of the currency, increases of equity prices) and stronger forecasts in “core” countries like Germany.

The exports will continue being the growth engine in Spain thanks to the rise of competitiveness as a result of increasing theproductivity and wage moderation (due to the implementation of the labour market reform). But there are also very important endogenous factors that from now on will boost the estimates, like the fiscal reform and corporate taxcuts in the process of being announced.

The Spanish economic recovery is going to stop being supported only by exports to turn being supported in a balanced way between exports and domestic demand growth.


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