Country Report
The Spanish government is seriously tackling its financial and economic issues. But the country is currently in a perfect storm of recession, missed budget deficit targets, rising government debt and rising opposition to government policies.
Economic Update
The contraction of the Spanish GDP volume in 12Q3 was much smaller than expected. But this will prove to be a temporary effect, since consumers have frontloaded their spending in August to avoid paying higher VAT rates in September.
Special
The eurozone's south is implementing austerity measures while the north is buying them the time to do so. Economic issues are usually extensively discussed. But what are the political risks that might render this strategy unfeasible?
Economic Update
Following two quarters of a 0.3% q-o-q GDP contraction, the decline in economic activity probably acce-lerated in 12Q2. The fact that the government has been unable to reduce the budget deficit up until May is worrying.
Economic Comment
A lot of bad news has emanated from Spain over the past couple of weeks. This is likely to keep the pressure on the Spanish government bond market. But we still maintain the view that a sovereign default in Spain is unlikely.
Economic Update
Spain is back in recession. The economy contracted by 0.3% q-o-q in 12Q1 – exactly matching the decline in the previous quarter.
Country Report
The Spanish economy is back in recession and government austerity measures will ensure that the economic contraction continues throughout the year. There is a clear risk that more austerity will further deepen the recession.
Economic Update
The Spanish economy contracted by 0.3% q-o-q in the last quarter of 2011. We expect a further contraction in the first quarter of the current year. Government spending cuts and tax hikes will have a negative impact on domestic demand this year.