The recovery strengthens

July 7th, 2014 – Article previously published in El Confidencial Digital.

Spain comes from a long recession that has lasted more than five years. However, our economy is three consecutive quarters in positive and if government forecasts are confirmed, the Bank of Spain, La Caixa Research Func or the second quarter of this year would be the consecutive quarter in which GDP grows. The Ministry of Economy and Competitiveness is convinced that this year, the Gross Domestic Product (GDP) of Spain product will grow 1.5%, surpassing even forecasts that the government sent to Brussels on April 30, as part of new economic picture that accompanied the Stability Programme and Reform Plan.

The positive start to the year for our economy has been in a strange international context: USA in the first quarter fell -2.9%, the eurozone grew by only 0.2%, and Spain, increased its wealth exactly twice Europe, 0.4%. The sources of information agree to note that in 2013, exports of goods and services (34.1% of GDP) were the main engine of growth. Forecasts for 2014 point to an increase in domestic demand, albeit slight, due to higher household consumption and business investment, while increasing imports. In the first six months of the year, private consumption has increased 3%, according to the Ministry of Economy and Competitiveness.

There is no doubt that unemployment in Spain is still very high and the unemployment rate is slowly declining (122,000 fewer unemployed in June, the registered unemployment data Public Employment Service, ancient INEM). The good news is that in the last twelve months and net jobs being created. The credit rating agencies (Fitch, Standard & Poors and Moody’s) have improved over June his views on the Spanish economy because the incipient positive data from the last four quarters seem to consolidate and become trend.

The household debt fell again in May for the sixth consecutive month and stood at 769.535 million euros, the lowest since November 2006, according to the Bank of Spain, which finds the deleveraging of households Spaniards from the start of the economic crisis. Specifically, recorded in the fifth month of the year 1,969 million figure is lower than that recorded in April and a decrease of 5.2% compared to the same month in 2013.

The drop in May from the previous (-0.25%) month explained by falling mortgage household debt of 0.30% to 600.365 million euros, and the decrease of 0.09% consumer credit, up to 166,104,000 euros.

In annual terms, consumer credit fell by 8.8%, while mortgage loans fell 4.1%. Despite this drop in housing investment over the crisis, the amount that families spend home still occupies most of its debt as it accounts for over two thirds of it.

Meanwhile, the corporate debt fell 0.23% in May and totaled 1,044 billion euros. On year corporate debt dropped by 5.9%, reflecting deleveraging companies since the beginning of the crisis.

Internationalization of Spanish Companies

One area in which for many years supported the economic growth of Spain and then collapsed, has recently turned in foreign markets to get airborne: large construction saved the first results of the year thanks to having 75 medium-% of its turnover abroad (OHL, FCC, Sacyr, ACS, Acciona, etc). Investors rewarded the internationalization strategy because, with the exception of some companies, most of these companies have risen in Exchange in the first six months of the year.

Abertis-Spanish multinational global leader in infrastructure management, oblivious to the problems of building-with capacity to invest in projects to 8,000 million, has eyes on U.S. highways buy among other international markets, by commissioning Barclays (ironies of life: the business of this bank in Spain could be acquired by La Caixa, shareholder in Abertis) to seek alternative investments in North America. And who says the United States, at a point of the planet, says Israel, Middle East, leader in information technology and start-ups, where Abertis is in talks to acquire the satellite group Spacecom East country. And the multinational Spanish, Catalan origin and worldwide mission continues spreading their tentacles in Italy, business phone masts (Wind and
Telecom Italia).

The automotive sector is leading the recovery of the industry: The new models car production soar to over 12%. In fact, the Spanish plants not producing at this rate since the 90s. In April, was made up 15.7% despite it having fewer working days, and exports grew by 8.35%. May was even better and the Spanish Association of Dealers anticipates that car sales in the first half of the year could increase by almost 20%. Continuous LIVE Plans have greatly helped keep afloat this vital industry for the Spanish economy. Much of vehicle production in Spain has not only end the local market but also the international markets through exports, especially to the European Union.

As is any event that happens in the most important volume of our entire economy, “Services” sector in March, billing services sector posted its biggest rally in four years (+3.9% increase). At the same time, the pace of growth in manufacturing activity has seven consecutive months of positive numbers and marks its best 50 months, with May and June 2nd record months.

Article previously published in El Confidencial Digital.