Recent data published for 2010 .
GDP variation -0.2 %
Inflation 3.3 %
Consumer Saving Rate 7.0 %
Unemployment is above 20 % and the trend is upwards .
GDP and Inflation are parameters of reachness together with added value of the GDP activity .
In 2009 GDP variation was – 3.6 % as per government estimations . Inflation was below zero .
In all , the figures mean that the loss of reachness in 2010 is more o less equal to that in 2009 .
The saving rate has been reduced by half in 2010 despite consumption being negative .
It is the picture of an economy highly stangflationist with tremendous consumption of energy and raw materials but low added value services and production . This model inevitably will lead into an spiral of deflation with real state prices falling by around 40 % .
Everything considered the conclusion can only be that demand will be much weaker in 2011 specially in a context where spanish banks are expected to restrict credits further , to be able to cope with Basl and ECB demands .
The need to keep deficits tied will further impair growth .
But in fact the biggest problem of Spain is that the economic model will have to be changed from construction to production and services with bigger added value based on new technologies .The situation is such that most specialised engineers are bound to migrate . Germany is actually inviting those professionals to change Spain for Germany .
The salary of engineers in new technologies is less than half the salary in north west Europe , as they are forced to work in under rated jobs in Spain .
With the present ecomic model a growth of say 2 % will need an inflation of 6 % with a tremendous growth of indebtment at all levels and the worsening of deficits etc…
Brahmason
Brahmason's Blog 