Exports driving Spain's incipient recovery: Economists
Zurich, April 18 : A new focus on exports - now 30 percent of Spain's GDP - as opposed to construction is crucial to the turnaround underway in the country's economic cycle, the executive director of Spain's Business Council for Competitiveness, or CEC, said Wednesday in Switzerland.
"There's been a change in how the Spanish economy works because now it's based on exports and not on construction. This change provides a sufficient basis for expecting gross domestic product growth in the coming year," Fernando Casado told EFE.
Economist Juan Jose Toribio, a professor at IESE Business School, added that "one of the positive aspects for Spain's recovery has been a drop in unitary labour costs, which in turn has had a positive impact on exports".
In Zurich for the "Spain: A Land of Opportunities" conference, organized by the CEC - which comprises more than a dozen of the Iberian nation's leading companies - and Spain's Foreign Trade Institute, the two men touted Spain's investment opportunities and sought to allay concerns about the country's competitiveness.
Casado said the government's labour and financial-sector reforms will yield results in the future and, along with exports, help ensure GDP growth by year's end.
Toribio, on his part, acknowledged that Spain is still in recession but he said the economy is undergoing a "sharp turnaround that could lead to net growth in 2014 and see the economy stabilize by the end of 2013".
Regarding the new economic reform plan to be unveiled by Prime Minister Mariano Rajoy's government April 26, both called for continuing to overhaul Spain's public administration, carrying out labour-law reform and adopting new measures in the knowledge and training area.
"The labour reform must be deepened. There needs to be a system that encourages the hiring of young people and reduces labour costs," Casado said.
Looking forward, he added that the economic recovery will only be a reality for Spaniards when it translates into job creation.
"People will believe it when they see tangible results. We won't begin to create jobs until the end of next year. Until that time, Spaniards won't believe the recovery is real," Casado said. (IANS)