The Bank of Spain said yesterday that the national GDP fell 0.1% in the second quarter. This figure is four tenths of a point less than in Q1 and indicates that the crisis is nearing an end. Funcas and the CEOE?s President, Juan Rosell, both backed this view yesterday.
Both GDP development and the national Survey of Active Workers, which is expected to come out tomorrow with improved numbers, show that the private sector has completed its major payroll overhauls. The economy is starting to recover and job losses will slow down. According to experts, we could start to see tangible results of the government?s labor reforms starting now.
The strength of foreign trade is not enought to make up for weak consumption inside Spain?s borders. In this sense, the Bank of Spain cautions the Finance Ministry that it still have a lot of work to do to increase tax revenues, becuase increased spending cuts could make it difficult for Spain to meet its deficit goal of 6.5% of GDP.
Analysts fear a long recovery or even a prolonged stagnation. In order to avoid the latter possibility, the government needs to accelerate pending reforms and curtail high administrative costs that companies are bearing. This would help Spain regain investor trust and allow its economy to grow faster.
