Compared to other European countries on the economic periphery, such as Italy, Portugal, Ireland, and Greece, Spain is making small improvements despite still having a long uphill battle. One of its first major problems is unemployment, which is now down from the 2013 incredible high of 26% to 22%. Although this is still very high, and for people under 30 years of age it is almost 50%, it is still leading against that of Italy, for example. Additionally, the Spanish have also implemented some reforms to help promote more business; they have reduced the number of procedures required to have a business, and have lowered the corporate income tax. These reforms have allowed Spain to move up in the "ease of doing business" rankings according to the World Bank. Spain's growth rate is also one of the highest in the euro area.
However, the economy is still far from where it should be and the growth that has been observed can be contributed to the fact that Spain has a lot of room to grow quickly because of how bad it had plunged. The GDP is about 4% less than what it was in 2008 when things were at the peak, but the Euro Zone as a whole is only 1% less. What more, some economists say that Spain's improvements are not due to the reforms put in place by President Rajoy, but by the fact that businesses had to lower wages and make other adjustments at the economy's downturn. Despite this, Spain is definitely not looking at a similar problem as Greece because it has been recovering for a longer period of time, and does not have similar political turmoil.
http://www.economist.com/news/finance-and-economics/21660550-growth-has-returned-dangers-still-lurk-back-its-feet
2 comments:
That is a great point about political turmoil. Since Spain has already lowered wages and made the necessary adjustments, they should be free from the many problems Greece is experiencing with revolts. This means that they can have a peaceful and faster return to economic success.
Great article Macie, it is encouraging to see that Spain is beginning to rebound after their "Great Spanish Recession". It's been a long road since the initial housing bubble burst and Spanish Banks failures dating back to 2008. Thanks to strict austerity measures and Eurozone bailouts, its encouraging to see a bit of positive response as the financial sector and Spanish economy swings back.
I'm definitely weary to see that the younger generations have such a high unemployment rate as they are the future of the nation. I also wonder how much of the country is unemployed but not actively seeking a job, therefore they are not included in the unemployment rate.
Lastly, I agree with your point arguing Spain is not in the same situation as Greece. Yes they went through severe financial strain at the same time but Spain's was not nearly as bad as Greece. Greece's crisis is rooted at years of overspending and a lax tax collection system; thus Greece's situation continues to spiral out of control as Spain is beginning to rebound.
Post a Comment