The Spanish economy does not make sense!
Can we trust the Spanish economy?
In 2010, a well-known American economist pointed out that Spain’s economy was close to collapse. This happened under the then Prime Minister José Luis Rodríguez Zapatero. Spain’s debt was below the EU average, but it is growing at the fastest rate. It is troubling that more than half of the increase in debt, was financed from the outside, but from where?
How is the situation more than fifteen years later? Unlike then, the European Central Bank has shown that it doesn’t let eurozone countries fail, and Spain enjoys risk premiums similar to those before that crisis. However, national public debt approached €1.7 trillion in 2015, compared to €600 billion in 2010, according to figures published Tuesday by the Bank of Spain.
But the improvements claimed by the current government contradict themselves, bucease the public debt closed 2025 at approximately 100.8% of GDP, or roughly €1.699 trillion! And the borrowing continues unabated, with a greater dependence on external financing than before, without explanations!
The question is whether this “oasis” for such heavily indebted countries will last forever. The government is acting as if it will, because debt grew by 5% in 2025, almost double the growth of the economy. However, its weight as a percentage of GDP is lower, falling from 101.7% of GDP in 2024 to 100.8% now. And that’s what Prime Minister Pedro Sánchez is clinging to. “We are significantly reducing public debt, as you know,” he stated last Monday to ministers, financiers, and business leaders to present the Spain Grows fund. The very next day, the Bank of Spain revealed that, in reality, it has increased by €80 billion in this boom year!
In summary, Spain’s recent economic performance is not “fake” but rather a result of specific structural (“cosmetic”) adjustments, energy advantages, and a robust tourism recovery.
My last question is whether Spain will manage to balance itself until next year’s government elections?
Thanks for reading my post.
#Windmush / #Curtbergsten
Economic forecast for Spain – Economy and Finance – European Commission
