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« Back to articles from category "Business Management"

The following article was published in our article directory on November 17, 2010.
Learn more about SpinDistribute Article Distribution System.

Spanish Economy Forward in the Struggle

Article Category: Business Management

Author Name: Amanda xzh

Spanish National Bureau of Statistics recently released data show that in the third quarter of Spain's GDP was flat with last quarter, ending the previous two quarters of 0.1% and 0.2% of the slow growth trend. However, compared with a year ago, third quarter GDP growth of 0.2%, is an international financial crisis the first time since the quarter grew.

Weak domestic demand

Spanish central banks and national statistical offices that since the government stopped issuing purchase subsidies, improve value-added tax and reduction of public spending in the third quarter of Spain sluggish domestic demand, and ultimately lead to economic growth stagnated. Bureau of Statistics data also show that in October this year, the Spanish consumer price index (CPI) rose 2.3%, is the largest increase over the past two years. Driving force behind the soaring CPI is the improvement of the Spanish government before the implementation of the VAT and tariff policies.

Such a high CPI increase for the ongoing tightening of the Spanish government, not good news. In accordance with Spanish law, the government needs according to the CPI increase in November to decide whether the purchasing power of pensioners to compensate. For example, in Spain in January of this year rose 1% of the pension, but if November's CPI rose by more than 1%, then the Spanish government needs to compensate for its excess. Spanish Second Deputy Prime Minister and Economy Minister Michel Salgado said last month, if the November CPI rose 2%, then the Spanish troops will have to pay about 800 million retirement subsidies for 20 billion euros, with an average of approximately 250 euros to each person . This will achieve the Spanish government control in 2011 budget deficit target of 6% less than the addition of new obstacles.

Looking forward to export its toll

According to the Spanish Industry, Tourism and Trade Ministry data, in July and August this year, Spanish exports of goods increased by 19.16% year on year. Meanwhile, in Spain Gross domestic product, exports of services in the areas listed as a foreign tourist arrivals went to Spain there have been positive growth. BBVA, a report that the European economy, especially the euro zone economic recovery faster than expected, the main reason for the Spanish export growth.

Bank of Spain pointed out that exports to Spain's third-quarter economic growth has played a stimulating role. Analysis of local media that, in the case of sluggish domestic demand and exports of Spain there is no doubt the engine of growth of gross domestic product. Eurostat has released preliminary results show that the third quarter of the EU and the euro zone GDP grew 0.4% qoq, 1.0% compared to last quarter's growth rate, slowing the pace of economic recovery. The industry believes that the momentum of economic recovery in the euro area still under variable conditions, the scope of the Spanish companies need to expand exports, especially in emerging markets to increase exports.

To ensure sustained growth

For Spain, next year is a crucial year to control fiscal deficits. Since May this year, to meet the EU's "stability and growth pact," the requirement to restore market confidence in the Spanish Treasury, including the implementation of the Spanish government to cut civil service salaries, freeze pensions, abolition of newborn babies to reduce government subsidies and public investment such as a series of stringent savings measures. In addition, from July 1 this year onwards, in order to increase tax revenue, the Spanish government increased the VAT rate. With the implementation of these measures, the Spanish government's financial position improved. As of the end of September, the Spanish government deficit was 36.363 billion euros, compared with same period last year contracted by more than 42%. Press here for Spain to control the budget deficit this year will account for less than 9.3% of GDP target for optimism.

But strict enforcement of the deficit control policy would inevitably affect economic growth, after the Spanish government has expected the economic growth in 2011 from 1.8% to 1.3%. According to the Spanish Minister of Labour Gomez has said that to achieve a substantial increase in jobs, the Spanish economy need to achieve 2% growth. In addition, Spain will hold local elections next spring, the high unemployment rate is certainly not conducive to the ruling Socialist Party increase its support rate.

71% of respondents believed that Spain will not be unable to repay the debt situation. However, due to the recent market concerns about the financial situation of the rise in Ireland, Spain bonds associated risk premium in the secondary market also increased significantly, which is an indirect reflection of market confidence in the Spanish economy is still insufficient. So the "Matador" must strive to ensure sustained economic growth, to effectively solve the unemployment problems and improve the confidence of the outside of Spain.

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