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Will Spain avoid economic collapse?


Will Spain avoid economic collapse?

Spain, in a sense, is the most worrisome situation at the moment. Its imbalances are actually not as extreme, by any stretch as those of Greece. Certainly its debt to GDP ratio is still relatively low, although it is rising very rapidly. Spain is a special concern because the total debt of Spain is over twice that of Greece—this is a significant economy.

The greatest vulnerability of Spain is that it has lost competitiveness, along with all the others, but at the same time, its economy has become far too dependant on what I would call the non-tradable sector, the sector that is sheltered from international competition—housing, services, restaurants, bars—activities that are generally non-tradable have become too big of a part of the economy and not enough of the economy is oriented toward external markets.

For these reasons, the collapse of the housing bubble and of domestic demand in Spain raises a profound question about the speed at which Spain can emerge from these problems.

15/10/2010 20:04 zpeconomiainsostenible Enlace permanente. sin tema

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