Signs of recovery for Q4 2013

While it is still too early to celebrate, there is evidence to warrant a mild optimism for the last quarter of the year according to a group of experts consulted by elEconomista.

If changing external factors, such as the Cyprus banking crisis or Italy?s efforts to solidify its new government, stay within manageable limits, then the Spanish economy could show its first signs of recovery during Q4. The relief would come at the end of a disappointing year of nearly 1.6% economic contraction.

The most significant part of this changing trend, which could happen as late at Q1 2014, is that it will drive job growth and allow Spain to hire more workers than it lays off for the first time since 2008. The government?s labor reform efforts will come into play here. Without a doubt, the most impactful reform work will have been carried out at that point.

The labor market has experienced drastic structural changes, cutting costs of employment drastically and loosening stiff salary obligations that plague companies in troubled times. This incipient economic dynamism combined with better growth prospects are the best arguments in support of the country?s chances for getting out of a recession.

To help make sure that it does, the government should finish its labor reforms entirely and trim the fat because state spending is at unsustainable levels. The regional governments caught a break themselves as their debt objective requirements for the year were relaxed.