According to a preliminary estimate by Spain’s statistic
instititute, the Instituto Nacional de Estadistica (INE), Spain’s economy has
grown at its fastest pace in the past six years. According to the report, the
economy grew by 0.4% during the quarter from January 1st to March 31st,
which is the largest growth that Spain has experienced since a property bubble
burst in 2008. The article comes from the Wall Street Journal, and the link is
included here: http://online.wsj.com/news/articles/SB10001424052702303678404579533123626167180.
In terms of
relating this to what we have learned and discussed in class, it is important
to remember the GDP model, which stipulates that
Consumption+Investment+Government Expenditure+Net Exports=Gross Domestic
Product. With this article, we understand that the GDP has grown by 0.4%,
meaning that certain aspects of the equation must have caused the rise. Through
the article, it is noted that consumption has risen, as evidenced by a Spanish
clothing brand, Zara, experiencing greater sales in Spain in their more recent
months than they had in any quarter the past six years.
As
previously stated, consumption increases have played a big part in why growth
is the best it has been. There has also been greater corporate investment in
Spain, which has helped the growth. However, it is important not to read too
much into this, as it is stated that the net exports factor has begun to
slowdown, and the growth could be short-lived. Further adding to that stress is
the continually high unemployment rate, which is expected to remain over 20%
for at least the next three years (although Spain does expect to have 3% growth
by then). Adding to the issues even more is the looming difficulty of
inflation, which is a whole other monster that creates tougher loan
environments. Overall, this article portrays both the recovery of Spain’s
economy, but also the looming issues and problems that must be dealt with in
the coming year.
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