In 2015, the Eurozone once again saw positive credit flows and a recovery in credit balance rates as a result of new transactions. But volumes are still well off pre-crisis maximum levels. In Spain, what does limit credit demand is the fact that companies have had positive financing capacity for the last seven years, which means that those with less debt have a strong self-financing buffer.
The figures issued by the Bank of Spain have confirmed what we could already see with the naked eye; namely that Spaniards are losing their fear of the future and spending again. After several years of austerity, the consumers in Spain have gradually loosened their purse strings over the past year. And to such an extent that consumer spending rose 3.1% in 2015, almost tripling the 1.2% registered a year earlier.
The figures in Spain are stubborn and worrying. Public debt will exceed 100% of GDP in 2016 and the deficit is not keeping pace with commited goals. So Spain’s public finances are a potential source of future instability, which the country cannot permit given that its external debt is close to 170% of GDP.
The most obvious falsehood in Spain’s Q4 GDP figure is the data related to Survey of the Active Population. According to Roberto Centeno,”job creation in the private sector slumped to 31,200 people from the 182,000 recorded in the previous quarter, with supposedly similar GDP growth. If we make a comparison with Q4 2014 to eliminate the seasonality effect, 63,100 new private sector jobs were created with GDP growth of 0.7%.”
Which countries are poised to become the next high-growth developing markets?Until recently, when people talked about “emerging markets,” they were referring to the BRIC economies: Brazil, Russia, India and China. Undeniably, these countries have changed the face of global business over the past 20 years. Yet lately, the BRICs have been crumbling a bit, sparking many reports about their lackluster performance.
James Alexander via Historinhas | Almost alone among economic commentators we do actually look at Nominal GDP data as it is released. Full Euro Area NGDP data for third quarter 2015 was released this week alongside the 2nd estimate of Real GDP. We have already posted here and here on the good news as three of the “big 4” Euro Area countries, making up 75% of the Euro Area economy, had seen accelerating NGDP. The not so good news is that the little countries saw less acceleration.
The National Statistics Institute published last Thursday the breakdown of third quarter GDP, which has been estimated as having grown 0.8% in the quarter (3.4% year-on-year). This data once again stands out in the euro area, despite the fact it implies a deceleration from the 1% registered in the previous quarter. But key analysts believe that good short-term results should not cloud the fact that there are still areas of Spain’s economy which need to be improved.
Since the Eurozone’s recovery started two years ago, the number of people in work has grown in all EU member states individually during the last seven quarters. In Q2’15 it expanded by 1.9% on a y-o-y basis.
The Spanish economy is in the “champions league” in terms of GDP growth, but has failed the deficit, unemployment and debt exams. The autumn forecasts from the European Commission raised the deficit non-compliance to 4.7% of GDP for this year and 3.6% for 2016, well off the levels of 4.2% and 2.8%, respectively, previously agreed with Brussels.
HowMuch.net | The countries with the highest debt-to-GDP ratios are Japan (230%), Greece (177%), Lebanon (134%), Jamaica (133%), Italy (132%), and Portugal (130%). This isn’t necessarily a huge problem. As long as countries are using borrowed funds to successfully stimulate their economies, they will be able to pay back their debts on time.