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economy

Government sources forecast GDP growth of 1.5 percent for 2014

Official figures suggest 0.7 percent, while economy minister recently cited 1 percent

Claudi Pérez
Guindos habla con el ministro alemán Wolfgang Schäuble, al inicio del Eurogrupo celebrado en Atenas.
Guindos habla con el ministro alemán Wolfgang Schäuble, al inicio del Eurogrupo celebrado en Atenas.ARIS MESSINIS (AFP)

Prices are falling. Salaries are falling. Loans are falling. The real estate sector is yet to touch bottom and consumer spending is still down. Two labor reforms later, unemployment is still above 25 percent; four years after austerity measures were rolled out, Spain’s public debt is nearly 100 percent of GDP and the deficit remains one of the biggest in all of Europe.

None of that bad news is stopping the government from arguing that a recovery is on its way, with forecasts getting better and better. The latest figure to be put out there is growth of 1.5 percent for 2014. “There is a clear improvement in market forecasts, and all of the early indicators are good,” government sources explained in Athens, ahead of the informal Eurogroup and Ecofin meetings between economy ministers from the EU and euro zone. “Growth will be between 1 and 1.5 percent in 2014.”

Just weeks ago, Economy Minister Luis de Guindos was speaking of 1 percent growth, while the official government forecast predicts a more modest 0.7 percent.

Just as recessions can take us by surprise, so can recoveries”

“Exports are still positive, and there is a degree of recovery in consumer spending and household investment,” the same sources continue. “Just as recessions can take us by surprise, so can recoveries. We are going to see strong data and the first reactivation will be after these six years of torture, given that not even in 2011 was there any clear growth.”

Spain has not only stepped out of the European spotlight, but is also now one of the major success stories being touted by the European Commission in the run up to EU elections. “Spain has carried out the reforms that have not been done by France or Italy, and is destined to give us some big surprises,” says a high-ranking European source. Madrid is also keen to stick to this script. “There have been improvements in financing conditions, which means interest savings of around 10 billion euros in 2013,” the same government sources explain. “The banking sector has improved. There are improvements in competitiveness, more flexibility in terms of salaries and the public deficit has fallen in line with objectives set by Brussels. We need two years of growth at 1.5 percent and we will leave the crisis behind.”

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