The Spanish Economy Will Soon Stop Contracting 

The global outlook this fall


Javier Díaz-Giménez

“Although it’s impossible to say exactly when it will show positive figures, the contraction of the Spanish economy will soon be over,” IESE Prof. Javier Díaz-Giménez told a Continuous Education session held on September 11 on the Madrid campus. The talk was titled “The Economy: The Global Outlook This Fall” and included a contribution from Prof. Juan J. Toribio. The conference was held within the framework of the Economic Situation Cycle organized by the Alumni Association.

According to Díaz-Giménez, reading the quarterly data it is possible to detect some positive trends, especially regarding exports and imports. However, the professor warned that the growth that Spain needs will depend on a rise in consumer spending, a variable that at present remains stagnant.

According to the latest report by the Federación de Estudios de Economía Aplicada (FEDEA), which collects data on the real economy, there is a trend towards light growth. Díaz-Giménez said that, although the end of contraction might be in sight, it was too soon to talk about the end of the recession. The data only suggest a trend and can’t be defined as absolute values. While the goal is not for zero growth, if that is what we are seeing, then it is a clear sign of a changing trend. History suggests that at the end of the recession we will see growth of less than 2 percent, the professor said.

Professor Toribio gave an overview of the main world economies and highlighted a degree of optimism in the United States and a “soft landing” with some risks in China. But he drew attention to Brazil, which he said is not what it was and is suffering from the same problems as other countries: high unemployment, large public debt and a poor balance of payments. This is also the case in India and Russia, although the Russians can count on their valuable oil exports.

Juan J. Toribio said that in the eurozone the situation favored a policy of monetary expansion. Spending cuts are bearing fruit, keeping in mind that Portugal, having been bailed out, is the country that has grown the most. Nevertheless, central Europe continues to contrast sharply with the countries of the periphery.

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