Davos ranks Spain close to bottom on deficit and credit access

Spain stands among the countries with the biggest public deficit and the most difficulties in exiting its economic crisis, according to a report by the Davos, Switzerland-based World Economic Forum (WEF) released Wednesday.

Out of the 144 countries in the WEF’s latest Global Competitiveness Report for the period 2012-2013, Spain ranks 135 in terms of its ability to curb the public deficit and 112 as regards the level of public debt.

Spain’s deficit last year was 8.9 percent of GDP after the failure of a number of regions to rein in spending caused the shortfall to overshoot the target that had been set of six percent of GDP. The goal agreed with the European Commission for this year is a deficit of 6.3 percent of GDP.

The report said the “severe difficulties” of some of the banks “have resulted in a lack of confidence in the financial markets,” reducing access to affordable financing. In this respect, Spain ranked 122.

R&D investment is crucial to facilitate  transformation of the country”

“Spain’s competitive edge is hampered by its economic imbalances,” the report said. However, despite the difficulties it is facing, Spain maintained its overall ranking in the Global Competitiveness Index of 36. That left it behind European Union countries such as Ireland (27), Belgium (17) and Estonia (34), and emerging economies such as China (31).

The ranking system takes into account factors such as the quality of a country’s institutions, infrastructure and health and educational systems.

Spain ranked 10 in terms of its “world-class transport infrastructure facilities” and 24 as regards its “good use” of information technology.

It was placed 18 when considering the quality of its university education, “which provides a pool of skilled labor that if properly mobilized, could help the country’s much-needed transition toward higher-value-added activities.”

That comment hints at the sad fact that Spain’s qualified young people, in the face of youth unemployment of around 50 percent, are leaving the country in hordes in search of opportunities elsewhere.

The report singled out a number of the measures introduced by the conservative government of Prime Minister Mariano Rajoy for praise such as reforms to the banking sector and the labor market. The report was drawn up before the decree approved last Friday on the latest overhaul of the financial system.

“The recently adopted structural reforms, both in the banking and labor market, should help in addressing these weaknesses once implemented,” the WEF said. However, it noted that Spain’s labor markets while improving remain “too rigid.” Spain ranked a 123 in this area.

The report also criticizes recent cuts in spending on research and development, an area in which Spain ranks 44. The WEF said investing in R&D is “crucial to facilitate the economic transformation of the country.”