Luis de Guindos said yesterday in Bilbao that Spain is doing what it needs to do in order to get out of its economic crisis. Also yesterday, several figures were published that indicate that there is reason to be optimistic about the future of the economy. Even more important, for the first time in 38 months, a length of time that predates the recession, small-business sales were up 2.2% in September.
This is a big help, especially for the small and growing stores, but we should not get too excited yet. For one thing, results were bound to be good this year because in September of last year the VAT increased by 3% and drove down spending. For another thing, if you throw out sales figures related to the summer tourism season, then small business sales actually fell 2.5%.
This indicates that this business sector, where spending grew 0.1% in the third quarter, is far from recovering. Commerce needs to increase in order to justify creating more jobs, and taxes need to be cut in order to galvanize spending. Spain is doing brisk business outside of the nation's borders, which is keeping the economy afloat.
That is affecting investor confidence. In the first eight months of the year, foreign investments in Spain have doubled. If Spain can meet its deficit objective, and in the August budget meeting it seemed like the nation is on track to do just that, we could be in good shape going forward. But we shouldn't forget that the biggest roadblock to a recovery is a self-satisfied attitude, forgetting our problems and not completing pending reforms.
