Bank of Spain: Positive Outlook For 2015

28 January 2015 – Expansión

The Bank of Spain emphasises the “stimulation” of private consumption / It also highlights a “slight improvement” in the production of goods, car registrations and consumer confidence and acknowledges the positive trend in employment.

Although the spending power of Spanish citizens has not yet returned to its pre-crisis levels, it did improve during the last quarter of 2014. The construction sector, one of the areas hardest hit by the crisis, also experienced a revival. These are two of the conclusions of the January Bulletin issued by the Bank of Spain yesterday. One of the factors that has contributed to this progress is “an improvement in financing conditions”. That is, the depreciation of the euro, the decrease in interest rates and the collapse of oil prices. Another positive development is the “very favourable performance of the labour market”.

The supervisory body says that the construction sector experienced an “upturn” in the latter part of last year, evidenced by an increase in the number of Social Security enrolments and a rise in cement consumption. “The information indicates that the recovery in the construction sector will continue, a trend that, from the point of view of the type of work, will affect both the residential and non-residential segments”, says the report.

Furthermore, the Bank of Spain insist that “private consumption indices suggest that this component of demand experienced more dynamic behaviour during the final part of 2014”. According to the Bulletin, a “slight improvement” was observed in retail sales, car registrations (which recorded an increase of 0.2% in December following a decrease in November), the production of consumer goods and consumer confidence. The day before yesterday, the main association of car manufacturers, Anfac, reported that 2.4 million vehicles were manufactured last year, 11% more than in 2013.


According to the regulator, the improvement in the labour market also gives cause for optimism. The Bulletin states that the Labour Force Survey (LFS) for the fourth quarter of 2014 showed a quarter-on-quarter increase in employment of 0.9% in seasonally adjusted terms, with the creation of 434,000 jobs, which will benefit almost every sector (especially construction), with the exception of agriculture. In addition, the number of full-time employees grew at a similar rate to those hired on part-time contracts.

In terms of the performance of the industrial sector, the Bank of Spain said that the month-on-month decline in the industrial production index moderated in November by 0.4%, whilst the two most important indicators of progress in the sector (the European Commission’s industrial confidence index and the manufacturing PMI) remained at “levels that are consistent” with continued expansion in this area.

The report also celebrated the “dynamism” of foreign tourism. Nevertheless, it highlighted that both the export and import of goods grew at more moderate rates in November. The latter grew by 4.3% in November, compared with 9.9% in October.

Similarly, the Bulletin indicated that the evolution of prices during the last part of 2014 was greatly affected by the unstoppable decline in oil prices on international markets, which caused CPI to decrease by 1% in December, year-on-year.

Economy-wide growth

Meanwhile, the Secretary of State for the Economy, Íñigo Fernández de Mesa, also said yesterday that growth in Spain will be “much more intensive in terms of labour, because more jobs will be created with less growth, and less intensive in terms of credit” and (growth) “will be based on all of the engines that drive the economy”, both the export sector and internal demand. “We are confident that 2015 is going to be a year of consolidation”, since “for the first time in a long time, Spain is not only growing, but all of the imbalances are also being corrected”, he said.

“Spain has gone from being the problem-child of the euro zone to being the country that is generating the highest growth and helping to drive the eurozone economy in a more intense way”, he said. He also pointed out that “growth is now greater” in those countries in which “the most significant reforms have been carried out”.

Original story: Expansión (by Yago González)

Translation: Carmel Drake