The Spanish economy is not experiencing the deceleration in growth that had been anticipated. Instead, growth held steady during the first quarter of the year and into the start of the second, once again surpassing expectations.
The Spanish economy is not experiencing the deceleration in growth that had been anticipated. Instead, growth held steady during the first quarter of the year and into the start of the second, once again surpassing expectations.
The intense turbulence in financial markets, the drop in stock values, and the uncertain political situation have impacted confidence indicators and expectations without affecting economic activity.
However, during the last few months, we have observed an acceleration in the contraction of business loans and a stabilization in the decreasing rate of household credit. Thus, we continue to believe the banking sector is in its last phase of deleveraging. Accordingly, we expect a gradual recovery in the extension of credit as the solvent demand for loans slowly improves and as the BCE provides banks with strong incentives.
Within this context of year-on-year decline in the volume of private sector lending, prices continue their downward trend while the gap differential with the Eurozone widens. Spain, in turn, gains a competitive advantage. The biggest outstanding macroeconomic imbalance continues to be the high public debt. Based on early 2016 indications, this does not represent good news.
