Spain is Pain, The Economist

27.07.2012

In its last issue, The Economist, analyzes Spain current situation. It does so in three different pieces. Let´s take a look.

In the section The euro, there is a piece under the title “A flight from Spain“, where we can read that “The prognosis for Spain is bleak. The economy is in recession, the public sector is cutting spending and the private sector is reluctant to invest. This lack of domestic demand almost guarantees that Mr Rajoy will fail to meet the target to reduce the deficit.”

In a second article, “The Spanish patient“, the author warns that “The biggest worry is Spain’s external debt. Spain ran hefty current-account deficits in the first decade of the euro. As a result, its liabilities to foreign investors exceeded the assets that its residents own abroad by 92% of GDP last year, among the highest in the euro area. The problem for Spain is that foreign capital has been fleeing over the past year. That has weakened the banks and the economy and left the Spanish government shunned by foreign investors for its own financing needs.”

Finally, in “Another weak link in the euro zone“, there is a depressing picture: “The immediate outlook for Spain is deeply depressing. The government now sees recession stretching into 2013, with the economy shrinking by 0.5% next year. Unemployment, at 25% of the workforce, is unlikely to come down. A recent €65 billion austerity package, which triggered widespread public protest, has failed to convince markets that Spain is getting its finances under control.”

As the cover shows: Spain is Pain, and Catalans must do all we can to cut the ties to avoid being dragged to the Spanish hell.