Malo de molina 150413 gic bbva fundación del pino

SPAIN AT A TIME OF EXTRAORDINARY MONETARY CHALLENGES

Jos茅 Luis Malo de Molina Director General

GIC-BBVA-Fundaci贸n del Pino Madrid 13 May 2015

GENERAL DIRECTORATE ECONOMICS, RESEARCH AND STATISTICS

THE ONGOING RECOVERY IN ACTIVITY

After a prolonged recession, the Spanish economy has started to experience a recovery phase REAL GDP GROWTH (y-o-y rates) SPAIN

EA

4,0

3,0 2,0 1,0 0,0 -1,0 -2,0 -3,0

-4,0 -5,0 -6,0 -7,0 2008

2009

2010

2011

2012

2013

2014

DIRECCIÓN GENERAL DEL SERVICIO DE ESTUDIOS

2

THE TWO PILLARS OF THE RECOVERY: THE RELIEF IN THE EURO AREA CRISIS The stabilization of the euro area has strongly mitigated financial tensions and supported the improvement in confidence ECONOMIC SENTIMENT INDICATOR (standardised)

SPREAD SPAIN-GERMANY (10Y bonds)

SPAIN 6

1,0

5

0,5

4

0,0

3

-0,5

2

-1,0

1

-1,5

0

EURO AREA

-2,0 2010

2011

2012

2013

2014

2015

2010

2011

2012

2013

2014

2015

DIRECCIÓN GENERAL DEL SERVICIO DE ESTUDIOS

3

THE TWO PILLARS OF THE RECOVERY: ADJUSTMENT AND REFORMS AT THE NATIONAL LEVEL

The recovery is based on the correction of imbalances through adjustments and reforms • The labour market reform has enabled wage moderation to take hold and jobs to be created •

Competitive disinflation has led to a correction of the external deficit

•

The adjustment of residential investment has been completed

•

Public finances are back on track

DIRECCIÓN GENERAL DEL SERVICIO DE ESTUDIOS

4

THE LABOUR MARKET REFORM

Changes in the labour market have brought wage moderation and inverted job destruction trends COMPENSATION PER EMPLOYEE. MARKET ECONOMY (Annual rate) 5

EMPLOYMENT. TOTAL ECONOMY (Annual rate) 2 1

4 0

-1

3

-2

2

-3 -4

1 -5

-6

0

-7

-1 2009

2010

2011

2012

2013

2014

-8 2009

2010

2011

2012

2013

2014

DIRECCIÓN GENERAL DEL SERVICIO DE ESTUDIOS

5

COMPETITIVENESS ADJUSTMENT THROUGH AN INTERNAL DEVALUATION PROCESSS The correction of past competitiveness losses has enabled the external deficit to be absorbed NET LENDING (+) OR NET BORROWING (-) OF THE NATION (% GDP)

UNIT LABOR COSTS RELATIVE TO THE EURO AREA ULC, whole economy

Compensation per employee

Productivity, whole economy

4

%

Index 1998=100 120

2

0

115

-2 110

-4 105

-6 100

-8 95

-10

-12

90 00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

00

01

02

03

04

05

06

07

08

09

10

11

12

DIRECCIÓN GENERAL DEL SERVICIO DE ESTUDIOS

13

14

6

ADJUSTMENT OF THE HOUSING MARKET

The severe adjustment in residential investment has bottomed out HOUSE PRICE

RESIDENTIAL INVESTMENT (% GDP)

Index 2007=100 110

11

100 10 90 9

80 70

8

60

7 50 6

40 30

5

20 00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

4 00

01

02

03

04

05

06

07

08

09

10

11

12

13

DIRECCIÓN GENERAL DEL SERVICIO DE ESTUDIOS

14

7

FISCAL CONSOLIDATION EFFORT AND SOSTENIBILITY OF PUBLIC FINANCES

Significant headway has been done in redressing public finances

GENERAL GOVERNMENT BALANCE (excluding aid to financial institutions) % GDP

4

2 0 -2 -4 -6 -8 -10 -12 2007

2008

2009

2010

2011

2012

2013

2014

DIRECCIÓN GENERAL DEL SERVICIO DE ESTUDIOS

8

THE SLOW DIGESTION OF THE BURDENSOME LEGACY OF THE CRISIS: ACTIVITY, EMPLOYMENT AND INCOME

A setback in welfare levels REAL GDP

GDP PER CAPITA (IN REAL PPP)

SPAIN

EURO AREA

SPAIN

2007-Q1=100

EURO AREA

I2007-Q1=100

104

102

102

100

100

98

98

96

96

94

94

92

92 90 2007

2008

2009

2010

2011

2012

2013

2014

90 2007

2008

EMPLOYMENT SPAIN

2009

2010

2011

2012

2013

2014

UNEMPLOYMENT RATE EURO AREA

SPAIN

EURO AREA

%

2007-Q1=100

30

105

25

100

20 95

15 90

10

85

80 2007

5

2008

2009

2010

2011

2012

2013

2014

0 2007

2008

2009

2010

2011

2012

2013

2014

DIRECCIÓN GENERAL DEL SERVICIO DE ESTUDIOS

9

THE LEGACY OF HIGH INDEBTEDNESS

Indebtedness levels are high and their reduction will take time PUBLIC DEBT (% GDP)

NON FINANCIAL CORPORATIONS DEBT (% GDP)

110

130

100

120

90

110

80

100

70

90

60

80

50

70

40

60

30

50

20

40 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

HOUSEHOLDS DEBT (% GDP)

90 85 80 75 70 65 60 55 50 45 40

INTERNATIONAL INVESTMENT POSITION (% GDP)

100 90

80 70 60 50

40 30 20

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

DIRECCIÓN GENERAL DEL SERVICIO DE ESTUDIOS

10

THANKS FOR YOUR ATTENTION

GENERAL DIRECTORATE ECONOMICS, RESEARCH AND STATISTICS