Spanish economy goes it alone: growing despite the absence of government
The Spanish economy is improving despite the eight months of a caretaker government. Although there is uncertainty about its sustainability, in Del Canto Chambers we are confident in the ability of our country. For this reason, we offer #EmbraceSpain to our international clients.
Spain has been ruled by a caretaker government for the last eight months and not a single rule has been enacted since October 2015. This is a provisional situation while waiting for a new prime minister to be invested. In the meantime, the capacity for action of the Executive is limited by law: not a rule can be enacted, nor ministers or other seniors officials can be appointed either.
Spain is going through a political deadlock since last December 2015: with two failed investitures in one year (candidates Pedro Sanchez and Mariano Rajoy -PSOE- -PP- lost their votings), it is likely that third elections be held on Christmas day, for which reason the stoppage could be extended at least until the first quarter of 2017.
However, the provisional nature of the government is not affecting the Spanish economy; in fact, economic data have improved. The Spanish economic growth this year has been of about 3% and business investments and consumer spending’s numbers have risen.
Thus, the Spanish GDP grew in the last quarter by 0.8%, stringing four consecutive quarters of increases. In addition, exports grew 2.3% in the first half of 2016. The unemployment data are also improving and it is expected to be able to soon lower the psychological barrier of 20% unemployment.
This very unusual situation, with a caretaker government and economy inertia, has been favored by low oil prices, reduced interest rates and good tourism data in recent years, in addition to the positive results of the reforms undertaken by the Executive until 2015, such as tax cuts that stimulated domestic demand and bank recapitalization.
The Spanish economy is on the rise but still lacking reforms not yet done, such as in education, while the labor reform still needs improvement, and specific measures to raise productivity have to be adopted.
In this sense, from BBVA Bank it has been pointed out that this government stoppage has reduced a few tenths Spanish GDP growth this year, being able to have achieved a growth of 3.4%.
In any case, if a new government is soon to be formed in Spain, further measures could be taken, not only to improve the economic data but to finally emerge from the crisis. Meanwhile, Del Canto Chambers proposes to use the hashtag #EmbraceSpain for our communications with international clients.
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Del Canto Chambers’ Editorial Board