Spain has failed to turn increased employment into economic growth and continues to be behind the other countries in the euro area.
Despite promising employment data and a better job market, Spain is still far from reaching the pre-pandemic levels of economic growth seen in 2019.
One of the best indications of the state of the Spanish economy is data regarding retail. Spain is the only country in the euro area that has not been able to recover its economic losses from the COVID crisis. Specifically, the country is 3% below figures from October 2019. This differs greatly from levels of economic growth in countries such as France (+10%), Germany (+6%), or even Greece, which in September registered an increase of almost 6% in retail sales in relation to the same month of the previous year.
According to data from the Centre for Sociological Research, the main reason for Spain’s economic weakness in comparison to the other members of the euro zone is the atmosphere of distrust and lack of confidence among the Spanish people. People either do not have savings to spend, or they have decided to keep them for any possible situations of economic adversity in the future. Consumer confidence in Spain also continues to be behind that of the other countries of the European Union, a result of doubts surrounding the growth of the gross domestic product (GDP) and the highly questionable handling of European funds.
The problem is worsened by the rise in the consumer price index (CPI), which skyrocketed last February. This inflationary spiral has led to an increase in prices, which further slows consumption. The other great burden is the supply chain crisis, which has not only caused a stock crisis in various Spanish warehouses, but also an increase in the prices of some products due to increased costs of transportation.
All of these combined factors mean that decreased levels of unemployment, which are actually lower than those pre-pandemic, do not manage to compensate for the various obstacles to economic recovery.
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