Sunday, July 31, 2016

Growth: Spain consolidates its relaunch – Les Echos

Growth in Spain continues the momentum. This is what announces the government stressing that the economy grew by 0.7% from April to June, although it marks a slight decline in the second quarter 2016, slightly below the 0.8% first trimester.

Nothing to worry about the eyes of the Minister of Economy Luis de Guindos, has revised upwards its forecasts for 2016, anticipating a 2.9% of GDP the year, well above the 1.6% expected for the entire euro area over the period. This is “realistic and conservative estimates” , he says, who also leads to cautiously adjust its figures for 2017, 2.3% growth by announcing the fact, says -he, “the impact of Brexit which could cost two or three decimal places in Spain”.

the good news is undoubtedly this dynamic allows the country to create jobs and begin to absorb the huge pocket of unemployment has been reduced to 20% of the workforce for the first time in six years, far from the peak of 27% in 2013 . the prospect of a tourist season all records this summer should accelerate this recession and Luis de Guindos estimates that unemployment will be 18.6% at the end of the year and 16.6% in late 2017, with the creation of 900,000 net jobs during these two years.


Still, these predictions are marked by blur, while the country remains in political uncertainty, no new government in sight in the coming weeks. The outgoing president, the conservative Mariano Rajoy, won the legislative elections of last June, had to ask last week to King Felipe unusual period before run for the nomination, not having yet met the support to ensure the Parliament’s vote in favor. Despite this uncertain situation, Spain consolidates its relaunch. She seems to have defeated his old demons and the belief of economists that he needed a growth of at least 2% to start creating jobs. A recent study by the foundation Funcas calculated effect that the country turns the “job machine” from 1% growth, due in particular to the reform that has eased the labor market. This means that the unemployment curve will continue to drop even though the economy growing at less than 2% from 2018, as provided by international agencies.

But the economist Daniel Fernandez Kranz, author of the study, warning of a trompe-l’oeil effect. This upturn in employment is mainly based on seasonal effects for low-skilled jobs. “The greater flexibility may have led to more in periods of low growth job creation” , he noted, stressing the fact that he perceives “not trace of greater dynamism in terms of creating stable jobs, but only in temporary employment creation ‘

Cécile Thibaud

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