Could there be past the worst of the recession in Spain?
| Date: April 20, 2009 | Source: Europa Press |
| Category: Economy | |
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Loading ... According Intermoney chief economist José Carlos Díez, yes, "the worst of the recession in Spain is over", thanks to the policies pursued by both the European Central Bank (ECB) and by the Spanish Government, which predicts a scenario darker for the rest of Europe, especially in Germany.
As he says, Spain reflects a pattern similar to the United States, where there are still several months of recession, but positive signs are seen, while in Europe the outlook is "very bad", especially in Germany, where the recession manifested late.
"The measures have been late, but they have come," Diez said, referring to both the delay of the European Central Bank to lower interest rates, as the plans implemented by the Executive Zapatero, including quoted the Plan ' E ', and the Fund for Acquisition of Financial Assets (FAFA).
Intermoney chief economist said the job losses is becoming less intense in Spain and predicted that the measures implemented will help to stabilize the economy over this year, while gross domestic product (GDP) to contract by 3.4 % and there is room to boost the economy through fiscal policies.
Government measures "have been positive, but now you can take another step," said Diez, in favor of the Executive to develop new initiatives in the housing market and in order to alleviate the financial difficulties of households without increasing the spending.
PURCHASE PROGRAM STATE HOUSING
Specifically, the expert proposes, firstly, that the state buy homes completed and develop a program of rent to own in a few years at current market prices, which would help avoid a collapse in prices as which may occur if the bank follows the real estate assets now swell its portfolio.
On the other hand, advocates to articulate a temporary financial assistance to households at risk of entering into default but resilient, as a kind of 'tax check' through which certain needs would be met in exchange for avoiding future relief tax on housing.
"The biggest risk is that banks sell the 800,000 out foreclosures, because prices would sink," said Jose Carlos Diez, who is required to revive domestic demand without damaging the external image of Spain not to scare off big investors .
2% wage increase
He also called for a wage increase tied to inflation target of 2%, as a way to protect the economy against deflation, and dismissed generalize a bilateral negotiation between employer and employee, unless the case of individual cases to prevent job losses.
Also opted for "reducing the rate of temporary untouched acquired rights" and that young people, essential to the recovery group, can have permanent contracts and thus save a significant obstacle they face in accessing credit from the banking.
This would contribute to the normalization of the financial system, which has hardened the conditions of access to loans, which affects the drop in demand. "Credit is crucial for economic recovery," insisted the chief economist Intermoney.
Retirement to 67
On the other hand, considered the proposal sensible Bank of Spain Governor Miguel Angel Fernandez Ordonez, opening the debate on extending the retirement age to 67 years, but also warned that given the current weakness of consumption "is not positive alert pensioners ", but to help maintain stable spending.
Diez also noted that the Spanish central bank has regulatory capacity and regulatory capacity to intervene in financial institutions, which felt good because, if necessary, can act more quickly if you do not count on these powers.
However, emphasized the need to intervene if an entity, such as Caja Castilla-La Mancha, management soon return to the private sector, as happened in the case of Banesto, because "the officials did not know how to manage businesses."
LOW INTEREST RATES, NOT MUCH EURIBOR
About the actions of central banks in the U.S. and the EU, the expert stated that is run for new interest rate cuts, and predicted that the price of money will remain cheap for a "long time".
While the ECB was "a by grapes" in 2008, rising interest rates when they had to lower them to tackle the recession, the body chaired by Jean Claude Trichet will continue lowering the policy rate even below 1%, although the ease of deposit do not exactly follow the same path.
In this sense, Diez explained that the Euribor, the kind that are referenced most mortgages in Spain, there is not much room down, so the soil could be between 1.25% and 1.5% .
