Spain’s Economy: Update 2010
As the common masses reel under the historic austerity measures, the latest numbers suggest a recovery for Spain’s economy. The fifth-largest Economy in Europe has seen some unprecedented hardships, ever since its real estate bubble busted around 2007-08. Spain’s Government deficit shot up to 11.1% in 2009, much to the annoyance of the European Union.
The news about Spain’s rising debt, along with other EU members, came during the first half of 2010, threatening to spell doom for the already flagging world economy. As a part of the damage control exercise, Spain began implementing tough economic plans to bring its deficit down to round 9.3% by the end of 2010 and within the EU norm of 3% by 2013.
The 9M 2010 regional results from the problem states put a stamp of propriety on the Government actions. The regions have a combined deficit of 1.24% of the GDP for nine months, with the full-year forecast being put near 2.4%. Out of the total 17 states in Spain, two are still plagued with higher deficits that individually account for more than 2% of the GDP.
Meanwhile, the Organization for Economic Cooperation and Development (OECD) has hailed the economic measures, stating that the Country is more than likely to meet its deficit targets even if the economic growth falls short of the forecast. Spain’s economy registered a negative growth of -3.6% in 2009.
After a further contraction this year, OECD is pegging the growth rate at 0.9% in 2011 and 1.8% in 2012, against the Government’s expectation of 1.3% and 2.5%, respectively. Despite its upbeat take on the Country’s progress, OECD has suggested some further measures, especially if the economy actually performs poorly in the coming fiscal.
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