The euro zone slowed to the point where it stopped growing in the second quarter of the year, prompting European Central bank chairman Mario Draghi to say on Monday that it was “in neutral.” Then came a warning from the Bank of Spain that the pace of the Spanish economy was also slowing, which was followed by Economy Minister Luis de Guindos stating that a European slowdown would threaten Spain’s recovery. The Spanish economy grew 0.6 percent between April and June – not much, but still the highest growth in the euro zone right now.
But when De Guindos presented the government’s new forecasts after the weekly Cabinet meeting on Friday, it was clear that he was expecting that slowdown to have nothing more than a transitory effect on Spain’s GDP. Indeed, the economy minister revealed that the administration of Prime Minister Mariano Rajoy has revised GDP forecasts for 2015 up from 1.8% to 2%, and that 348,200 jobs would be created that same year. That would leave the unemployment rate at 22.9% in 2015, compared to its current level of 24.5%.
It is perhaps no coincidence that 2015 is an election year
It is perhaps no coincidence that 2015 is an election year; as such, the minister was keen to point out that the government’s unemployment forecast for the final quarter of 2015 is 22.1% – “A lower percentage than that seen at the end of the previous legislature,” he told the press on Friday. Indeed, at the end of the Zapatero administration in 2011, unemployment stood at 22.5% of the active population.
But closer analysis of the Rajoy government’s economic record does not stand up so well in terms of jobs, given that, according to these latest government figures, between the end of 2011 and the end of 2015, more than 395,000 jobs will have been destroyed. The fact that the unemployment rate is predicted to end 2015 at a similar level as that in 2011 is because the active population has fallen over that period, as has been reflected in the official statistics released over the last two years.
Closer analysis of this government’s economic record does not stand up so well in terms of jobs
But the slowdown in the euro zone is reflected in the government’s forecasts for the remainder of this year. The Economy Ministry was expecting to close the year with GDP growth of 1.5%, but on Friday announced that it was revising that figure to 1.3%. A fall in exports – the euro zone buys half of the goods and services sold outside Spain – is partly to blame. The government’s expectations in terms of job creation remain unchanged, a rise of 0.9% compared to 2013, while unemployment will see the year out at 24.7%, barely changed from the government’s previous prediction of 24.9%.
During Friday’s press conference, De Guindos offered explanations for his forecasts, which go from a slowdown in the final months of 2014 to a spike in growth and job creation in 2015. “The figures show that we are in a process of accelerated recovery, in which the recent worsening of the European economy has been incorporated,” he said.