The slowing GDP and employment – Newspaper

The slowing GDP and employment – Newspaper

Thursday, September 25, 2014

Cola to enter an employment office in Madrid in April.

Before the end to take flight, the Spanish economy in the third quarter signs of weakness in the context of the euro area “in neutral” (in the words of the president of the European Central Bank, Mario Draghi) concern extends shadows.

Two days of this Government, on Friday, its draft State Budget for 2015 Bank of Spain found yesterday the existence of a slowdown in domestic private demand (consumption and investment) as well as “some moderation in job creation in July and August, with respect to the dynamism observed in the first half of the year”, while the wage moderation continues recent quarters.

The slowdown of the European economy, meanwhile, pollutes the Spanish and by means of a lower export growth contributes to the trade deficit doubled compared to a year ago .

The Government, for its part, maintains order, announced by President Mariano Rajoy himself revised upwards its growth forecast of 1.2% this year. Although Economy Minister Luis de Guindos hinted that the review could reach 1.5% it seems now that the scope will be somewhat lower (up to 1.3% or 1.4%). By 2015, spending is forecast from 1.8% to around 2%.

De Guindos himself has recognized that the environment is less favorable now than a few months ago, but the government understands that reforms rush in the Spanish economy-particularly in the financial sector will allow take advantage of the measures implemented by the ECB to stimulate lending. Also stresses that the devaluation of the euro induced will support the foreign sector.

Panorama bleak

In its monthly report released yesterday, the Bank of Spain interprets “information most recently, based on the third quarter, seem to indicate a somewhat less expansive behavior of private demand, “both consumption and investment. Indicators point in this direction such as opinion polls, car registration, sales of large enterprises, retail trade and production of goods and others relating to the construction sector.

In the external sector, the report notes that “trade flows of goods experienced a significant rebound in July”, both on the side of exports by imports. However, it is emphasized that in cumulative terms, the trade deficit amounted to 13,700 million euros, more than double that in the same peroodo last year. The indicators for the tourism sector, however, “confirm the strength of the sector during the summer season between January and July.”

As a result of all these elements, according to provisional data of the balance of payments , “the Spanish economy in June showed a surplus of € 1,000 million, slightly less than half the figure for the same month last year.” In cumulative terms, a need for external financing 5.900 billion recorded in the whole of the first half of 2014, compared to the financing capacity of 2,900 million in the same period of 2013.

If last year, financing capacity of the Spanish economy (1.5% of GDP) was exhibited by the Government as the ultimate test of its reorganization, the need for external financing is coming in 2014 could now disfigure the official discourse.

On the supply side, information on industrial activity points to “some moderation in the pace of growth observed until the second quarter” while indicators relating to the services sector, meanwhile, ” continued to show signs of strength in the third quarter. ” The indicators on the evolution of labor costs extend the pattern of wage moderation in recent quarters.