Spain is suffering from five years of economic crisis and a 26% unemployment rate. As glimmers of hope appear, we should proceed with caution. Especially because the double-dip recession taught us that the positive trends that governments look for can reverse quickly. It's necessary for all sides to keep a measured approach, tempering premature optimism with serious rationalism.
The positive signs abound. Foreign investors have resumed purchasing debt from Spanish companies and governments, which has eased the nation's risk premium. Tourism and exports are rising. Labor markets are adding measures of flexibility thanks to recent government reforms to make Spain more competitive globally. Families and companies are starting to reduce their debt level.
The question is whether all these positive signs are good enough to face serious economic issues like unemployment (our main problem), the national deficit and national debt. Even more reforms and cutbacks are needed in order to fix budget imbalances and make economic activity more efficient.
These measures will negatively affect near-term job creation, but will reduce the nation's debt repayment requirements. Germany, which held elections this year, does not advocate for systematic growth for Spain, but it is prepared to push EU nations to meet their budget requirements even if they drown. Why does Merkel want to stir up the euro zone even more? Contradictory symptoms suggest that the recovery is not yet a sure bet.
