From the FT: Now that the trend has once again gone into reverse, ministers are putting on a brave face. They contend that the sharp rise in imports reflects above all else the jump in shipments of machinery and factory equipment to the Spanish private sector. It is, they argue, a sign of confidence rather than weakness. The drop in exports, meanwhile, is dismissed as a temporary blip owing to the strength of the euro and emerging market weakness. There is some merit to these arguments – but they still fly in the face of much that was said by Madrid (and others) over the past two years. The return of domestic demand and private consumption are indeed positive signs, but it is hard to see how they can sustain the country’s economic recovery when Spain is still labouring under sky-high unemployment and towering public and private sector debt. One way or the other, Spain needs its export machine to start humming again. It was the strength of the external sector that put the country back on to the path of growth, and lifted it out of recession. It would be a cruel irony indeed if the recovery were to falter now because that trend is going into reverse.
Posted on: Mon, 21 Jul 2014 18:10:47 +0000
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