Evolution Of The Spanish Economy

SHORT TERM ASSESTMENT: EVOLUTION OF THE SPANISH ECONOMY
Alejandro Vallés (nº 973)
The fact that the Spanish economy is not going well is not a secret for anyone. For some time,too long for most of the Spanish, the economy is deteriorating and the harsh measures taken do not seem to stop it. In the second week of October new notices and economic events came up, that haveimpacted negatively on the view of the situation.
1. Standard&Poor’s agency has downgraded the sovereign debt rating to the level before “bono basura”. Uncertainty of Spanish solvency isincreasing notably. EU decisions are confusing and not take too much time. Also the other countries are worried and that these decisions are not going to help to change the situation in the near prospect.2. Autumn forecasts IMF, predicted by many analysts, estimate a fall in GDP of 1,5% for Spain, as well as a public deficit above the objective of 6,3%. For 2013, the IMF estimate a fall in GDP of1,3% and a public deficit of 5,7%. Also, the unemployment rate will be very high. Those numbers are certainly far from the forecasts made. Failing to comply means increase quotas of disappointmentand distrust.

3. The inflation has almost doubled in three months. October numbers placed it in 3,4 %, and this increase does not respond to demand pressures, which is falling below, or labor costincrease. This implies that it isn´t not a positive inflation. It depends, in one hand, on the oil price increase and, in the other, the increase of the IVA tax and the medicaments price that theconsumer pays.

I pointed out that demand shrinks. The short- term indicators of the economy show us different examples. We have said that the growth rate is decreasing and we can say the same for thehousehold consumption, gross fixed capital formation and the imports of goods and services. The exports have increased but not substantially. In addition, the activity indicator decreases as...