Spanish GDP to grow between 0.5% and 1% in 2014, says ESADE

Barcelona (ACN).- The Spanish economy should grow between 0.5% and 1% in 2014, a “very moderate” growth that will make it “difficult” for the unemployment rates to fall below the current 27%. This was the conclusion of the 2014 Economic Report of the Catalan ESADE, one of the top business schools in the world, which has two campuses in Barcelona, one in Madrid and one in Buenos Aires. The main author of the report, Josep Comajuncosa, Professor of Economy at the prestigious business school, stressed that this “slow and costly” growth should contribute only in a “very reduced” way to creating new jobs in 2014. However, he also explained that the Labour Market Reform would have positive effects on employment levels in the medium and long term. The study indicates that consumption in 2014 will “remain restricted” due to the high unemployment rates and reduced wages.

Josep Comajuncosa and the other authors of the study are “slightly optimistic” about certain aspects of the Spanish economy, especially regarding companies’ activity abroad (with high export levels) and the Labour Market Reform, which should have positive effects in the medium and long-term. According to them, the Labour Reform has allowed a wage reduction in Spain, a very important step towards better competitiveness. It was also “essential” since companies have been able to conduct the necessary adjustments without having to lay off staff and therefore cutting of jobs.  

Consumption will still have little impact on economic recovery but will not hinder it

The report notes that the external sector will be a key sector for growth although it is “essential to improve domestic demand in order to achieve a more solid recovery”. According to ESADE’s study, the increase in consumption relies on loan recovery for individuals and families, a drop in the unemployment rates, and more favourable expectations for the economy. Regarding consumption, which is equivalent to 65% of the Spanish GDP growth, the authors stressed that domestic demand and household consumption will have “almost no effect” on economic growth, “breaking the trend of the past three years” (when the severe consumption drops seriously damaged the entire economy).