Read with Caution

For the Spanish economists I wrote about here last week, the phrase “official statistics” is little more than a synonym for “invented statistics” when it applies to Spain’s economy. They will therefore be deeply sceptical of the latest “official” indicator of Spain’s economic health - namely that in the first quarter of 2017, the country’s GDP expanded by 0.8%, up 0.1% from most predictions for the period. Yet the furious letter these economists sent to the EU recently is not the only reason why we should read such figures with caution.

Miniscule macroeconomic differences like this mean absolutely nothing for the vast majority of Spaniards. This is not just because GDP expansion of 0.1% is so small that it won’t register in Spanish households; it’s also because the real problem for the Spanish economy is unemployment - a problem for which the solution is still a work in progress, if that.

The 2017 Q1 growth statistic came out at the same time as data showing that Spain’s unemployment level rose slightly in the same period and is now about 18.8% - a slight increase from the end of 2016. Though you could say that this, too, is a fairly small increase, it translates into real, tangible effects for hundreds of thousands of working Spaniards.

The fact that this year’s late Easter fell outside the first quarter - and not boosting the Q1 figures with holiday jobs - highlights the key problem for the Spanish labour market: temporary contracts. Recent data from Spain’s Ministry of Labour shows that the number of workers who sign more than ten employment contracts every year increased from 150,000 in 2012 to 270,000 in 2016. Healthy GDP statistics divert attention from a labour market beset by insecurity.

The Q1 growth figures also fail to speak of the danger of further political uncertainty in Spain. This week’s parliamentary debate over the government’s proposed 2017 budget highlighted the difficulties Mariano Rajoy has in leading a minority administration. If Pedro Sánchez takes back leadership of the Socialists later this month, the PP veteran’s problems will only get worse. And if Spanish politicians once again turn to squabbling among themselves then Spain’s unemployment problem will wait even longer for a lasting solution.