Is Spain finally recovered?

 •  Filed under Own charts, EU, PIIE

One good story of this year appears to be that the Spanish economy is getting stronger. And yet, just like in many places across Europe, it is not clear how much of the growth in output is actually felt by people who are marginally employed or who are still looking for jobs. As the WSJ reported today:

European authorities like to claim Spain’s return to growth as a success story, but many Spaniards say they aren’t feeling the recovery. The economy has been growing for seven consecutive quarters, up 2.7% in the year through March. Yet the unemployment rate is almost 24%, and a recent European Union survey found 97% of Spaniards still view the economic situation as “bad.”

The problem, for too long, has been the economic non-recovery, as seen by the negative slope (in the case of Spain) of the blue line after 2008. The dotted red line shows the expected trajectory of GDP until 2016:

Source: PIIE

Spain has suffered a lot after the crisis, considering that its economy grew by more than 20% between 2000 and 2007. The charts show that it grew almost as fast as some of the emerging markets of Central and Eastern Europe.

One interesting aspect of the story is that Spain is not losing people, in spite of the harshness of the 2009-13 period. In many countries hit hard by the crisis, thousands of people have emigrated. Spain is one of the countries where population is growing. Possibly an indicator of deep-seated hope (even if not expressed directly in surveys)?

Population in millions    
 200720132017 (projected) Change from 2007 to 2017

Also, in the last three years, the cyclically adjusted deficit has been 3.3% of potential GDP (that's between 2012-14). So, things are getting better on many fronts. If only unemployment started falling as quickly as the budget deficit!