From: Athinarayanan Sanjeevraja
Date: April 18, 2012.
RE: The economic crises in Spain
Suggestion: Good Morning Mrs. Vice President. Of course, this is my
first inscription to Spain Government. Financial Times, London articled on
April 12, 2012 that “Spain needs pre-emptive action”. It addressed three main
problems such as the budget, the banking sector and the labour market. The task
is an arduous but it is not impossible because Spain has proven itself competent
of economic reform and financial restructuring. If I am not mistaken, the
country current account deficit was 10 percent GDP in 2008. The current account
deficit descended to 3.7 percent in 2011. Spain has adjusted its current
account deficit more than 6 pp of GDP at a spectacular space in three years.
The significance of other economic reforms is such as reducing the budget
deficit and labour market reforms to increase the country future economic
growth
As far as the Spain financial structure reform, it is not adequate to
make credit flow again. The Government has to superfluous restructure the
financial system so that banks can generate healthy profit and be adequately
solid to meet demand. It is my judgment that credit will not enhance until the
solvent demand boosts. So it is indispensible to generate solvent credit demand
and to ensure that solid banking system can respond to such demand. I think
financial restructuring still remains much to do, not only to continue to
repair the effects on the banking system of global financial crises but also to
give a framework to combat future financial crises. I think, the biggest problem Spain has its
unemployment. The labour market reform
has also introduced in February 2012. I
hope that labour market reform can bring about the lasting, future oriented
turnaround for Spain. I must tell you that Spain put huge effort so far but the
country is improbable to see the prompt recovery in the Spanish economy. But Ireland
was in severe recession in 2009-2010. But Ireland started growing again in 2011
due to more market based economic reform and more business friendly tax
structure played a huge role of the Irish economy.
I’m going to conclude with a few words, Spain is in EU membership and as
I believe EU membership will assist Spain overcoming the crises. EU membership
has assisted during the global financial crises such as the interest rate cuts,
the unlimited supply of liquidity, ECB bond purchases and three year
refinancing operations are most beneficial for Spain. I hope that Spain will
overcome all the problems in the short term with help of EU membership.
Thank you
for attention.
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