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Controversy over Spain’s recovery ‘round the corner’ and ‘the next Germany’ forecast

Friday, February 22nd 2013 - 16:03 UTC
Full article 7 comments
President Mariano Rajoy has the challenge of almost six million persons out of work President Mariano Rajoy has the challenge of almost six million persons out of work

US multinational financial service corporation Morgan Stanley has declared that Spain has already got over the worst of the economic crisis and augurs that it “will become the next Germany” in the European Union. This however is challenged by the Financial Times, Goldman Sachs, Citibank and the IMF.

MS argues that this could materialise as a result of the reduction in labour costs in part due to the recession, in part as a result of the sweeping reforms introduced by the conservative Partido Popular of President Mariano Rajoy and because of the increase in national exports.

In an economic report, MS analysts declare that this idea together with a German economic dip has been gathering credence in the markets of late, and that there is more than a mere possibility of this happening. MS says that the worst is over not just for Spain but for the entire Euro-zone as a whole.

The bank document states that despite the cases of generalised corruption which have hit Spain’s political establishment, and which are currently focused on the ruling party, “no one believes they are sufficient enough to provoke a change of government or to modify the economic reform policies that are already under way.”

The greatest risks identified by the bank which they concede are improbable, is that the Governments of Washington, Berlin, Paris, Rome or Madrid make irretrievable mistakes; otherwise economic recovery will be a reality toward the end of 2013 or 2014, it says.

But the optimism about Spain by Morgan Stanley is not shared by the prestigious Financial Times which soon poured cold water on the prediction. According to the publication, macroeconomic data available do not back any immediate bright outlook for Spain.

“Macroeconomic data make it difficult to envisage a point of recovery for Spain as toward the end of the year GDP contracted at a higher rate than in the previous three years, while insolvencies increased in the last quarter of 2012 at the fastest rate since the beginning of the crisis; and without visible signs of an improvement in the unemployment situation which now affects around six million persons”.

The newspaper states that improved market confidence is not borne out by macroeconomic data or by long term economic forecasts.

Goldman Sachs, the International Monetary Fund and Citibank have also made sombre predictions about a prolonged recession affecting Spain.

Categories: Economy, Politics, International.

Top Comments

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  • Shed-time

    I know where I'm not investing my money, and with whom.

    Feb 22nd, 2013 - 04:54 pm 0
  • Conqueror

    @1 Hope you're avoiding Spain. And anywhere else in the eurozone.
    The EU is, of course, continuing to fall apart. Thankfully, at least 50% of the British people are now committed to leaving the dumb attempt thought up by the nazis to gain European domination, even though they lost the war!

    But it is nice to think that Spain may be going downhill faster than the rest. Rising unemployment, rising costs, falling wages, spreading poverty. All good signs to show “latinos” that they have, once again, got it wrong. Fortunately, the argie “government” is too stupid to read the situation properly. Also, it dare not admit that it might have got things wrong! And so it rushes headlong into the abyss. Does Spain have 26% inflation? Not yet. Do the unions in Spain demand that the starting point for wage increase “negotiations” is 25%? Not yet. Does Spain have regular brown-outs and black-outs? Not yet. Does Spain have to print “credit” notes in place of money? Not yet. Argieland is much closer to implosion. Now, the UK and the USA are joined to block any loans to argieland. Germany and Italy are already on board. Three major powers lined up against argieland. And Italy. Let's all hope that argieland loses all its many court cases. Wonder where they'll get the billions they owe? Anyone want to buy a “country”? Cheap. After all, the argies will have to liquidate their few “assets” to pay their debts. Or face occupation. Occupation by the world and seizure of assets. Argies will have to learn how to work. We should start making lists of what argieland will have to give up. And look forward to argieland being controlled by the UN. Listed as a non-self-governing territory.

    Feb 22nd, 2013 - 06:48 pm 0
  • briton

    Why would you believe a country?
    That has done nothing but lie all these years

    If she recovers then so be it,
    If not, then another lie will have been told,

    Nothing new their then ..

    Feb 22nd, 2013 - 07:21 pm 0
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