The Bank of Spain's 2011 annual report encourages citizens to not succumb to "fatigue caused by tough reforms." The supervisor fears that Spain's deteriorating economic situation is undermining politicians' willingness to continue making structural reforms, which the Bank of Spain believes should be executed rapidly. While the impact of a double recession has hurt the Spanish economy's ability to recover, the Bank of Spain report offers a small glimpse of hope by predicted that starting in 2013 Spain will enter the first phases of full recovery.
The Bank of Spain warns that Greece, in its long and turbulent bailout, is an example for how not to do things. In order to avoid a similar situation in Spain, it is necessary to enact and carry out reforms as quickly as possible. The Bank of Spain has finally estimated the impact that recent labor reforms and collective bargaining agreements should have on the economy: a 2.5% increase in GDP by 2014.
Because many of Spain's problems extend beyond the peninsula to the rest of the euro zone, Spain should continue to make reforms and press for strict European governance that aims toward a new monetary policy, eradicates the sovereign debt crisis and finds a solution for Europe's financial sector.
There's a lot of race left to run, and it's important not to confuse small steps forward with full recovery. But when full recovery arrives, we should be able to look back and see that all necessary reform steps were taken. The Bank of Spain is right when it calls for more reforms and a quicker pace.
