The Spanish economy is not suffering

José Ramón Iturriaga


Although it may sound like provocation, the Spanish economy is not suffering much. They are inevitable the headlines and the comments of each other before any economic data out of context. And it is impossible to try to depoliticize the economy, when it is one of the best throwing weapons in the electoral campaign, but the best. It is inevitable and legitimate.

However, one thing is what is said and another thing is reality. If we were to focus exclusively on the former, Spain would be at the gates of a recession comparable to that of 2008 and 2009, or its replica of 2011-12, which in the Spanish case was especially virulent.

And that is not like that. The recession in Spain is not in the data we see daily, nor is it expected. Further, it is necessary to differentiate between what it is to grow somewhat less, but at very healthy rates, as is the case, what it means to enter into recession. The figures suggest that we should be growing half a point per quarter, which leaves annual growth at around 2%, somewhat less than we had been growing, but much more than the rest of comparable economies.

In addition, the way we are growing allows us to think of two things: on the one hand, that we still have a cycle for a while and, on the other, far from what it may seem, that to nothing that the rest of the world recovers we could grow back closer to 3 than 2%. The Spanish economy does not have large imbalances, the leverage of the private sector has been greatly reduced, there are no bubbles anywhere and job creation and improving wages are taking traction. With this picture it is difficult, if not impossible, for us to enter a recession, much less in one even similar to the last one.

I feel that the data are ahead so good headlines and arguments, but that is what it is. Although, probably, it doesn't matter either.

Comings and goings of the price of oil

The price of a barrel of oil has practically returned to the levels prior to the bombing of the Saudi refineries. Brent is somewhat above, but Wext Texas is there. The manner and speed with which the conflict has been resolved serves to draw some conclusions.

From the geopolitical point of view, it seems that the United States has renounced the role of police in the world. After the inevitable bravado of Donald Trump, the United States has not moved a finger and has continued with the low profile of the last American administration. Trump prefers cheap oil to impose his law. Obama's reasons were probably others.

Further, seen in recent weeks confirms the least influence of OPEC when it comes to the price of crude oil. At a time when the Saudis are clearly interested in a high price given the imminent IPO of Aramco, the world's largest oil company sees them and wants them to keep it above $ 60.

In addition, Iran's possible return to the market will add more pressure to the price, at a time when the oil cartel's ability to act is very limited after the latest cuts. The possible lifting of the sanctions, despite what has been seen in recent weeks, seems to be closer every day.

The growing production capacity by the United States has broken with the dynamics of the past. Despite OPEC's efforts, the price of oil, with its comings and goings, seems to have only one way. As is known, the Stone Age did not end because the stones disappeared and the same will happen with oil. Meanwhile, enjoy contained prices, which is undoubtedly great news for developed economies and specifically Spain.

The Stock Exchange and Trump

Before the news about the "impeachement" of the American president and the consequences that may or may not have, there is a reflection on what will be the reaction of the markets to the end of the Trump presidency, or because they take him out, or because they do not get reelection next year.

The Almost three years of the presidency of the American tycoon have registered a very positive balance in terms of the behavior of the Exchange. Extraordinarily positive: US equities have risen more than 40% in that period. Faced with the first reactions of the market - on the day of his election, the American market was falling by 5% due to the unexpected result - the bizarre president accumulates a very positive balance measured in terms of stock market gains. Are you surprised? Me. Faced with what "a priori" we could think about Trump's capabilities, the balance of his peculiar style is not bad. And because? Because basically he hasn't done great things. Many tweets, fuss and bravado that have remained in that.

Seen this way, a hasty departure from the presidency could have negative consequences for the Bags, as is already being done to wield the blond beast. Or not. We must not establish a causal relationship between the behavior of the Exchange and the moves in the White House. The stock market has not risen thanks to the president, he has done it despite him, since he has not done much. Neither good nor, of course, bad as many feared. Perhaps well seen, it has been precisely the Stock Exchange that has prevented Trump from committing great stumbling blocks. Strong responses to some of the presidential threats have been the best deterrent.

So, regardless of what may happen with the "impeachement" and the consequences of his reelection or not in 2020 (I am also one of those who believe that Trump handles very well in noise and that from the electoral point of view the Democrats have peeled it), there is no need to draw greater conclusions towards the Stock Exchange. Trump has been good for the markets, although probably for the wrong reasons.

José Ramón IturriagaJosé Ramón Iturriaga

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