This article discusses a weakness of Spain's economy; their unemployment rate. Unemployment has been an ongoing problem for Spain's economy, and according to this article it is getting worse. Today, Friday April 27th 2012, the Spanish government reported that the unemployment rate has reached an all time high of 24.4%. This new unemployment rate is equivalent to a total of 5,639,500 people in Spain that are jobless.
http://money.cnn.com/2012/04/27/news/economy/spain-jobs-growth/index.htm?iid=HP_LN
8 comments:
That's incredible that the unemployment has reached that level. Just to put Spain's unemployment rate in perspective during the Great Depression, the unemployment rate was 25% at the peak of the depression in 1933.
I definitely think that Spain could strengthen its educated work force because this would give workers more skills and potentially more job opportunities in other countries. I also think that Spain needs to escape from the fiscal policies they have been using and need to utilize a monetary policy, specifically a monetary expansionary policy, to create economic growth. This would essentially create more jobs, decreasing the unemployment rate. Additionally, it would increase consumer confidence and increase spending, which would also cause economic growth due to the money being put back into the economy.
I think that Lauren makes a good point, an expansionary monetary policy could boost Spain's economy. However, with an expansionary monetary policy comes the potential for inflation and higher interest rates. I am not sure about Spain's overall economic situation, and whether or not it could sustain a stabalized level of economic growth with an expansionary policy; if however, Spain's economy is stable enough to do so, this policy may make a significant difference especially with the unemployment rate!
Since Spain is part of the Eurozone, the monetary policy is dictated by Central European bank in Germany. Spanish government then cannot have monetary policy for their own.
However, Spain economy is not at all stable right now and they are very much on the verge of bankruptcy. Expansionary fiscal policy is very unlikely for the Spanish government too.
This new unemployment rate is very concerning for the well-being of the Eurozone. I wonder if this will cause an even worse credit-rating or perhaps an increased chance of a requested bailout for Spain. That would result in major problems for the EU and further exacerbate the issue.
Blogger Kexuan Guo said...
Span’s unemployment rate is an impending problem. I agree that Spain should take measurements to control its unemployment rate. Another important problem might be the government high spending on well-being, which is a prevalent problem for the European countries. Once this problem is fundamentally changed, the burden of the governments will be much lighter. As a result, the economy will recover much faster.
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