Spain: Importance of Recovering from the Shadows of Recession

In an interview on Sunday Luis De Guindos, Spain’s Economy Minister, made an encouraging comment concerning the economy of the country. He said that a dramatic improvement is expected in the second half of the year. However, he also pointed out that reforms and cost cutting must be implemented in order to sustain the slow yet determined recovery of Spain from the years of recession. Minister Guindos also made it clear that these changes should be carefully implemented and at the right pace to ensure that the country’s recovery is steady and strong.

The next step

Recession has characterized the economies of many European countries in the past few years. Even a powerful economy such as the United States was not exempt from the harsh reality of recession. The economic stability that Spain used to enjoy eventually plunged into financial crisis in latter months of 2011.

This year, things are looking up with a recent 0.5% increase in the first quarter of 2013. After reaching this current peak the Spanish government is very hopeful that the second quarter will bring a more steady growth and economic stability to the country.

A critical time

The announcement that the recession is over does not mean everything will automatically return back to normal. The Spanish government still needs to work very hard in order to maintain the positive outlook that delivered the country out of the darkness of the recession.

Minister De Guindos compared Spain’s recovery to a young flower inside a greenhouse. He said that like a little flower, the economy should be tended with care to ensure wonderful results. He also implied that economic reforms should be considered as well as the reduction of financial deficit. Recovery can also be encouraged by improving credits and gathering investors to support the Spanish economy.

Fighting unemployment

Spain is currently experiencing employment issues with a standing rate of 27% unemployed citizens. The recession cost a quarter of formerly employed citizens to lose their jobs and lose the capacity to sustain the needs of their families.

Last month, the International Monetary Fund (IMF) declared that Spain was expected to regain its economic stability in the latter part of 2013. The institution also hinted that the Spanish government needs to create more jobs for the unemployed and initiate greater protection and security to its vulnerable banking system.

Signs of improvement

In a report by the Bank of Spain, retail and household confidence slightly increased in the months of April and May. The bank views this improvement as a clear indication that consumption of goods is marking-up. The difference is quite visible since consumption was affected by the mass unemployment Spain had experienced in the recent past. Foreign sales are also looking good with exports sustaining a remarkable increase in the months of March and April as well.

According to Cristobal Montoro, Budget Minister of Spain, the Spanish economy is at a turning point and will eventually return to economic prominence. He agreed that everything is starting to get better and that stability and growth are underway.

Photo Credit: Spain’s Economy Minister Luis De Guindos