Growth doubts shadow Spanish sunshine season

MADRID – In Almeria’s Cabo de Gata natural park, one of the few unspoiled stretches left of Spain’s southern coast, Hotel Tio Kiko is nearly full. Its owner, Jose Venzal Alonso, isn’t optimistic, though.

“I can’t say I see an economic recovery,” the 51-year-old hotel manager said. “All our clients are saying so: that they can’t afford to stay more than three days when they would happily come for six before the crisis. We used to have a full house 
much earlier in the season.”

Spain’s dependence on foreign earnings from exports and the summer tourism boom has intensified since a real-estate crash and the deepest budget cuts in its democratic history crippled domestic demand.

With that seasonal boost to employment and growth in full swing, Prime Minister Mariano Rajoy is counting on an economic recovery in the second half of this year to help curb 
surging public debt.

Economy Minister Luis de Guindos said Spain is in a “comfortable situation” in terms of funding and liquidity, according to a 20 July interview in Moscow, where he met with Group of 20 finance ministers.

Data this week will show how viable Spain’s recovery hope is, as the Bank of Spain releases a report predicted by economists to estimate that the economy contracted for an eighth quarter during the three months through June. Labour market numbers will also show whether unemployment rose to a record in that period.

“Jobless numbers adjusted for the seasonal boost due to tourism show unemployment is still climbing,” said James Howat, an economist at Capital Economics Ltd. in London. “Fast enough economic growth to generate net increases in employment remains a distant prospect.”

© 2013, Bloomberg News

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