Tuesday, May 4, 2010

Under-estimating the power of Spanish Economy is a mistake, Spanish market will be hot once again

Spain is one of the 10 largest major economies of the world with not only one of the largest tourism industries of Europe and the world but it is a diversified industrial nation and a major exporter/importer. We can not compare it to Greece.

Spain is a powerful nation and will manage its debt and economy better than any European nation. Spanish banks are some of the most conservative and profitably run banks of the world.Spain is one of the European nations with a large young population and its unemployment problems originated after its entry into the European Economic Community [EEC] which later became the European Union. Spanish unemployment numbers have always been very high but its merely a number. The real Spanish Economy is pretty strong. Being heavily dependent on incoming tourism, most of the times over half of the people who make a living in tourism industry are not counted as full fledge employed. It is not the only critical factor to assess the vast Industrial complex of Spain.

All these comments are merely gossip and nonsense based on unreliable facts.
The viral media hype about Euro-debt is bigger than the real reality and shows that most of these exxagerated comments come from those who do not know the realities of Modern European economies.
After having lived and managed in Spain and Europe for long time to know it well I still get surprised at the typical Anglo-saxon bias against Spain. Spain has been a star economy and it generated lot of jealousy.

I think Spain's entry into the EU in 1986 was a big mistake. It literally sold itself to Germans and let its industry be folded or ruined. Despite the mistakes done in so called Europeanization of Spain and so called Upgrades to its infrastracture, Spain has managed to survive as a healthy young nation.

Spain will succeed in managing its financials in very near future.
By the way the problem of high unemployment in Spain is 25 years old and it is not a major factor in current problems. I think some people are exxagerating and over stating certain things.

Spain is not comparable to Greece or Portugal. Its economy, life and financials are many times better than the one of the UK and the USA. It will come out of the current Euro debt crisis with flying colors and it will be once again the hot market for years to come.

Spanish Economy

The Spanish economy was credited for having avoided the virtual zero growth rate of some of its largest partners in the EU (namely France, German and Italy) in the late 90's and at the beginning of the 21st century in a process which started with former Prime Minister Aznar's recommenced liberalization and deregulation reforms aimed at reducing the state's role in the economy. In 1995, the country began an impressive economic cycle marked by strong economic growth, with figures at or above 3%. In 2008, however, the bursting of the housing bubble resulted in a severe recession that greatly outstripped successive government predictions.

Growth in the decade prior to 2008 steadily diminished the per capita economic gap between Spain and the largest economies in the EU. By the end of this economic cycle, Spain's per capita position had overtaken Italy's and was streadily approaching that of France.

During this time the Spanish economy was regarded as one of the most dynamic within the EU, even able to replace the leading role of much larger economies like the ones of France and Germany, thus subsequently attracting significant amounts of native and foreign investment. Also, during the period spanning from the mid 1980s through the mid 2000s, Spain was second only to France in being the most successful OECD country in terms of reducing income inequality over this period.
Due to its own economic development and the recent EU enlargements up to 27 members (2007), Spain as a whole exceeded (105%) the average of the EU GDP in 2006 placing it ahead of Italy (103% for 2006).
In July 2009, the IMF worsened the estimates for Spain's 2009 contraction, to minus 4% of GDP for the year (close to the European average of minus 4.6%), besides, it estimated a further 0.8% contraction of the Spanish economy for 2010, the worst prospect amid advanced economies.

In 2007 the total Spanish public debt (government debt) relative to the total GDP was well below the European Union average, and in fact the government budget was running on a slight fiscal surplus, but the financial situation has since rapidly deteriorated. From late 2008 the public debt relative to GDP began to climb steeply, reaching almost the same percentage level as the UK's, although still well below Greece's level, at the beginning of 2010. Because of the severity of Spain's economic crisis, annual government deficits are expected to remain high and will continue to add heavily to the public debt over the next few years, as an expected slow recovery holds down tax receipts while welfare and other recession related expenses remain high.

The Spanish banking system has been credited as one of the most solid and best of all western banking systems to cope with the ongoing worldwide liquidity crisis, thanks to the country's conservative banking rules and practices. Banks are required to have high capital provisions and to demand various guarantees and securities from intending borrowers. This has allowed the banks, particularly the geographically and industrially diversified large banks like BBVA and Santander, to weather the real estate deflation better than expected. Indeed, these banks have been able to capitalise on their strong position to buy up distressed banking assets elsewhere in Europe and in the United States.

Ever since the 1990s some Spanish companies have gained multinational status, often, but not only, expanding their activities in culturally close Latin America, where Spain is the second biggest foreign investor after the United States.

Spanish companies lead fields like renewable energy (Iberdrola is the world's largest renewable energy operator and infrastructure, with six of the ten biggest international construction firms specialising in transport being Spanish, like Ferrovial, Acciona, ACS, OHL or FCC.

No comments:

Post a Comment

News headlines

World Market Sentiment

This market meter contains 26 major indices of the world, to see more indices you have to move the mouse towards down.

Useful Sites for Traders Investors

World Market Pulse magazine

About World Market Pulse

An unbiased review of world markets. Review of current market scene, news, events and forecasting for the days to come.
Our focus is on prominent emerging markets, major world markets and national financial centers of big industrialized nations.

There are many markets that have their own personality and they do not necessarily follow the United States Financial markets. We can post news, views and analysis and forecasts for specific market areas to enhance value for your portfolios. If you are based outside the country of interest, you could participate in the world markets by investing in Exchange traded funds about we would be discussing and providing ample information.