THIS REPORT WAS PUBLISHED BY THE HERITAGE FOUNDATION HERE.
The Spanish economy is under serious threat. The Sánchez Administration is using the excuse of a serious health crisis to enact policies that undermine investor and business security and restrict personal and economic freedom. Such interventionism will trap the economy by increasing fiscal imbalances—Spain’s historical mistake—and put the country on a destructive track that will erode freedom and result in excessive spending, more debt, and rigidity. The long-term social and economic consequences of these mistakes can be enormous. Instead, the government should implement serious measures to enhance economic freedom and allow a strong recovery soon.
Continue reading Spain’s Economic Freedom Improves—But Post-COVID Risks Are Enormous (Heritage Foundation) →
The International Monetary Fund can be criticized for many things, but its analysis of countries’ debt risk tends to be worth a read.
In this case, the International Monetary Fund has once again warned Spain of the risk of reversing reforms and increasing imbalances. Continue reading Spain: IMF Highlights Rising Risks →
Originally Published by Hedgeye here.
Political risk in Europe was largely ignored in international markets because of the mirage of the so-called “Macron effect”. The ECB’s massive quantitative easing program and a perception that everything was different this time in Europe added to the illusion of growth and stability. Continue reading After Italy… Spain Risk Soars →
Please read the rest of the article here.
In the early 2000s the Spanish economy was also booming, but it was on the back of debt-fuelled domestic demand, an overheated and uncompetitive construction sector and a severe housing bubble. The trade deficit reached more than €100bn. Now exports make up a third of national output, compared to a quarter before the crisis, and there was a €22bn current account surplus in 2017. The domestic construction sector has shrunk rapidly, replaced by manufacturing and other high-skilled industries. “The Spanish economy is seeing robust growth, but also more resilient growth,” says Daniel Lacalle, chief economist at fund manager Tressis. Moody’s, on issuing their ratings upgrade last month, said: “It has become increasingly clear that structural changes in the economy have changed the growth model to one that is broader-based and more sustainable than in past recoveries.”