July 25, 2021

Bubble 2.0 | Economy | THE COUNTRY

Bubble 2.0 | Economy | THE COUNTRY

In October, affiliations to Social Security recorded the greatest job creation in history with a growth of 3% compared to October of last year, triple that of our European partners. But again the PP leaves the Government and an economic model similar to the one left in 2004 that was the cause of the greatest economic crisis in Spain since the Civil War.

In 1995, exports in real terms, keeping prices constant, were equivalent to 20% of GDP and imports to 19%. In 2007 exports accounted for 26% of GDP and imports 32%. And oil prices went from $ 20 per barrel in 1995 to $ 150 maximum in 2008.

Therefore, Spanish exports had a meritorious growth despite suffering an appreciation of the real effective exchange rate of 20%. The problem of the economic model of the bubble in Spain was to concentrate a lot of capital and employment in sectors of low productivity, oriented to domestic demand that caused uncontrolled growth of imports. That, together with the rise in oil prices, explains that the external deficit will go from 1% of GDP in 1995 to 10% in 2008 and the external debt of 25% of GDP to 90%, one of the largest in the world.

In 2012, the attempt to convince us that the labor reform It had changed our export-based growth model. The reality is that in the last year exports have stopped rising and GDP and employment are growing again due to domestic demand and the contribution of the foreign sector to growth is again negative, as in the bubble. Productivity is stagnant As in the bubble.

Employment in construction it grows 7% annually and despite the fact that it represents 6% of total employment, explains 14% of the same growth. As in the bubble. The employment of immigrants grows 6% and, with an unemployment rate of 15%, the immigrant population grows 3%. As in the bubble. Mortgage credit grows almost 20%, new construction visas increase by 25%, housing prices rise well above wages and banks are undercapitalized, highly leveraged, and give credit without raising deposits. As in the bubble. The new government talks about GDP and employment, like Guindos a year ago, and encourages young people to work in construction because they say it is a sector of the future, as Aznar said 15 years ago.

Foreign debt remains at 90% of GDP. As in the bubble. If the growth of the eurozone does not pick up or the price of oil does not fall strongly in 2019 we will have an external deficit again. As in the bubble. The ECB rates at 0% are much lower than the growth of our nominal GDP. As in the bubble. The human being always stumbles on the same stone, but must try not to fall in love with it.


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