Marc Chandler: The new fiscal compact had just been signed last week, which includes somewhat more rigorous fiscal rule and enforcement, when Spain’s PM Rajoy revealed that this year’s deficit would come in around 5.8 percent of GDP rather the 4.4 percent target. This of course follows last year’s 8.5 percent overshoot of the 6 percent target.
The problem that for Spain is that the 4.4 percent target was based on forecasts for more than 2 percent growth this year. However, in late February, the EU cuts its forecast to a 1 percent contraction. This still seems optimistic. The IMF forecasts a 1.7 percent contraction, which the Spanish government now accepts.
This will be the third year in 5 that the Spanish economy contracts. Unemployment stands at an EU-high of 23.5 percent in February. The strong export growth seen in recent years, the best growth in the euro area, is stalling. Domestic demand has been hit by rising unemployment and government austerity…..
2 MILLION empty appartments along the cost del sol stand as a testament to the sins of the past. Most built with South American cheap imported labour. Hundreds of billions of dollars and billions of tons of resources bleaching in Spain’s beautiful but corrupt environment…….. We never learn.
Cheap imported South American labor, that reminds me of a story a friend told me: Flight from Buenos Aires full of Paraguayans, Bolivians, etc., lands at Barajas, Spanish officials tell the passengers, “OK, everybody who’s here just to visit line up here, people who came to work line up over there.” The naive campesinos dutifully sort themselves out and everybody in the “here to work” group is detained and sent back home on the next plane …