Spain has put itself in the economic spotlight after a rapid spurt of growth.
GDP rose by 0.9% in the first three months of the year, the fastest pace since the before the global financial meltdown in 2007.
After a long and hard slump, hopes are being pinned on the country, the eurozone’s fourth largest economy, to help the region grow out of its torpor.
An analyst at Credit Suisse called it “harvest time” for Spain, noting that “the healthy recovery has made Spain the showcase for structural reform efforts”.
Credit Suisse was not alone in heaping praise on Spain’s structural reforms, with some lecturing Greece that it could achieve the same if it just behaved. Others have also said that the French have failed to sufficiently modernise their economy, leading to today’s stagnation.
Spain undertook labour reforms in 2012, but back-slapping observers were not able to dodge the country’s 23.8% unemployment rate, the eurozone’s second highest.
Tax reforms took hold at the beginning of the year when income taxes dropped from 52% to 47% for the highest rate and from 27% to 24% for the lowest. The government has promised further cuts, but only of course if it stays in power.
Spain, like many other countries, is benefitting from falling oil prices which have brought down some prices for consumers and also from the weaker euro which has boosted exports.
The quantitative easing programme from the European Central Bank may have played a part in Spain’s growth, but many observers believe it is too early to assess the initiative’s impact.
The news may boost the ruling Popular Party in the polls but the traditional two main parties bouncing in and out of power has been interrupted by the rise of the new kid on the block, anti-austerity party Podemos, as well as the growing support of another contender, Ciudadanos (Citizens).
The general election must be held by the end of the year.
