OECD upgrades Spain job prospects

2014 is already looking much healthier for Spain's economy

The Organization for Economic Cooperation and Development (OECD) has revised its forecast for Spain’s unemployment figures in 2014, stating that the country’s job woes may have peaked in 2013.

Next year they forecast that unemployment will not continue to rise, and may in fact fall as Spain’s economy moves further away from recession towards small but encouraging growth…

Having hovered at around 27 per cent throughout 2013, Spain’s unemployment figure is expected to average 26.3 per cent in 2014. Hardly anything to write home about, but an improvement on previous increases and an upturn in fortunes since the OECD made a prediction in May this year that unemployment in Spain in 2014 would climb to 28 per cent.

Since then, however, Spain’s economy has exhibited a heartening display of robustness and bullishness, swatting away fears of further contraction and actually growing in some sectors, most notably in tourism and automobile manufacturing – industries that have both enjoyed a relatively positive 12 months.

Indeed, Spanish Prime Minister Mariano Rajoy has even spoken of his desire to see Spain’s exports – fuelled by the thriving automobile industry that is second only to Germany’s in Europe – generate further growth for the economy.

That growth is unlikely to come initially from domestic demand, as the government’s severe austerity measures continue to exert downward pressure on consumer confidence and spending power.

Nonetheless, the OECD and the Spanish government both expect Spain’s economy to grow by 0.7 per cent in 2014 following a contraction of 1.3 per cent this year. Meanwhile, private consumption, although expected to shrink in 2014, will not contract as sharply as first feared.

“Recent indicators suggest that the declines in domestic demand are starting to abate,” said the OECD report. “Core inflation is also subsiding, boding well for consumer purchasing power.”

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