Spanish Economy Grows in Third Quarter

October 1, 2015Spainby EW News Desk Team

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The Spanish economy expanded 0.8 percent due to such factors as increased demand and lower oil prices, notes Bloomberg Business. However, take the latest data with a grain of salt as momentum continues to slow compared to the previous quarter. A slowdown in the Chinese economy, a big factor, and overall volatility within the world economy will prevent substantial growth in the near term.

Spanish politicians are up for elections in December, so the latest economic news will help current leadership. Spain is attempting structural reforms, unlike some other EU nations.   In addition, the U.S. has not been paying much attention to Spain’s plight.  Despite the efforts, Spain's economy remains in poor condition, and the public is growing increasingly weary as living standards decline.

Job creation is occurring, but not ones that offer long-term, sustainable living. Like many other governments, Spain appears to be propping up an artificial recovery that does little in helping the populace at large.

For instance, although unemployment levels have gone down, Spain has the second-highest unemployment rate after Greece, hovering at over 22 percent, and wage growth remains lackluster.

Reform Efforts

One important plan promoted by the EU included allowing companies to cut salaries for low-wage workers and changing contract terms. Such a change has uplifted the Spanish economy to an extent, but it will ultimately undermine the recovery by disenfranchising low-wage workers that relied on those contracts and salaries to make a decent living.

The new rules placed workers in the awkward position of struggling to find stable employment, fueling the nation's long-term unemployment situation. Like workers in the United States, many Spaniards seek full-time employment but are unable to get the necessary high-quality jobs that raise living standards.

The poor state of the labor market also sustains the so-called black economy, comprised of legitimate jobs that offer untraceable and untaxable income. The black economy has become a way of life for many Spaniards, signaling that the recovery is not as meaningful as advertised.

Uncertain Future

The low-wage climate affects consumer spending as well, a crucial element in getting the economy on stable footing. Household spending contracted by over 11 percent in Spain in the past six years, cites Reuters.

With so many people looking for work, or stuck in unstable jobs, such an atmosphere provides uncertainty and only further hampers economic progress. Moreover, such a sustained lack of growth only gives rise to austerity measures in the future, placing Spain in a perpetual cycle of poverty and instability. Certain sectors have seen gains, but Spain is nowhere near a substantial recovery that benefits all Spaniards.

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