Future of Spanish economy

The past few years we have heard so much about the Spanish economy. Is Spain headed in the right direction? What do the facts reveal about the state of the economy?


The government was optimistic when forecasting their economic growth for 2011 of 1.3% although analysts see only a 0.8% growth rate. With these numbers they are confident the job market will improve. But will this slow economic growth cause a drop in the unemployment rate to a level where we will see light at the end of the tunnel?


What the U.S. economy accomplished in 2010 will help put everything in perspective.


In January 2010 the joblessness rate was 9.7%. The U.S. economy grew 2.9% in 2010 yet the unemployment rate only dropped 0.7% to 9.0%. Using this as a yardstick, the economic growth forecast of 1.3% won't jump start the economy in 2011 and I doubt that it will in 2012.


The housing market is still in shambles. Buyers are reluctant to make a long-term commitment. As a result of the housing bubble crash with prices plummeting 20% or more there are 320,000 homeowners owing more on their mortgage than their property is worth (underwater mortgage.) With prices predicted to drop again this year that number will increase and more than likely we will see an increase in the default rate.


A strong euro is taking a toll on the economy. Although some might think that a strong euro is positive for the economy it is not. It only makes Spain less competitive as exports become more expensive. Also, Spain can't devalue their currency to become more competitive like the United States or Great Britain.


This may be a very simplistic way of looking at the economic prospects of Spain and offend professional economists.  However, the professional economists got the ‘boom and bust’ of Spain appallingly wrong (together with the world credit crunch!) and I am sure that looking at basic fundamentals is what really counts.  This, I fear, is no more than just the application of plain commonsense.


Certainly, I am unaware of anything ‘new’ that is occurring in Spain to replace the huge past value of its construction industry which, it is universally acknowledged, will be in the doldrums for years to come.  Until ‘something’ does, the future for the economy in Spain, frankly, looks dire.


What does this all mean – if you want to work in Spain?


Well, many of the ‘old certainties’ of easy money have gone and you should be under no illusions that you will be entering a tough marketplace if you move to Spain.  That does not mean that you cannot work in Spain or that there are no possibilities.  That would be the wrong impression.


However, as I write in my new book, you need to know the ‘cold’ truth and then be much cleverer than before to target and exploit precise niches.  These certainly do exist and I am a great believer in the cliche that states: ‘where there are problems – so also are there opportunities.  This is never more so the case than when a country has long term economic problems.  You just need to know where the opportunities are – or how to operate laterally within a troubled economy!