Thursday, January 5, 2012

Spanish economy in free-fall

This does not come as a surprise to anyone but here are some interesting graphs about the Spanish economy, published by The Atlantic.
To sum up: The overall unemployment rate is in the mid-20s, industrial production and services activity have both cratered, construction indicators like cement consumption have been devastated after doubling between 1998 and 2007, retail is in a free fall, and exports (most of which go to Europe) are falling. [Word of warning: None of these graphs have the same Y-axis range, so beware direct comparisons.]
In the next year, Spain is meant to cut spending to show the bond market that Madrid can stabilize its all-important ratio of debt to GDP. But what Spain really needs today is what it had 10 years ago: Lots of money flowing into the country! Spanish leaders know the intricacies of Spanish economics far better than I ... but I do know something about ratios, and if your GDP isn't growing, it's rather impossible to increase your GDP faster than your debt.
Spain has avoided an even worse recession, if you can believe it, by growing exports in every year since the housing crash. But even here, trouble lurks. As you can see (bottom-right graph in the collection above), export growth is slowing down as the nation's largest trade partners -- in order: France, Germany, Portugal, Italy, and the UK, which account for more than half of Spanish exports -- all face austerity regimes of their own, which is likely to make businesses and consumers cut back on Spanish goods. In a word: Yikes.
I have noticed that there are more Spanish youngsters working in various low-skill jobs in London than there had been for years. They are competing with the Poles and, personally, I think the Poles are more efficient, friendlier and better at learning English. However, that is, undoubtedly, a sign of the times.


  1. And more trouble for Spain at local government level

    More to come, doubtless

  2. Thanks for the llink, John.