Reasons to be “positive but not naive” about the Spanish economy

Prof. Jordi Gual, sixth from the left, speaking at a dinner for real estate professionals organised by Amat Immobiliaris

Prof. Jordi Gual, sixth from the left, speaking at a dinner for real estate professionals organised by Amat Immobiliaris

Jordi Gual – one of the most influential economists in Spain – recently explained his views on the Spanish economy at a private dinner I attended. I left feeling more positive than I had arrived.

Professor Jordi Gual is the Chief Strategy Officer and Chief Economist of the CaixBank group (one of the biggest banks in Spain), Professor of Economics at IESE Business School, and has a Ph.D. in Economics, from the University of California-Berkeley. He is one of the most influential economists in Spain.

Speaking at a dinner in Sant Cugat for real estate professionals organised by Amat Immobiliaris – an estate agency and family firm established in 1948 – Jordi Gual talked about the global economic situation – the oil price crash, slowdown in China, and low interest rates – and the implications for the Spanish economy as it emerges from recession after a painful internal devaluation and restructuring, and now faces political headwinds after a General Election that gave no party a clear mandate.

After reading so many gloomy headlines both in the local and international press of late, it was reassuring to listen to a a more balanced view from someone with access to all the data. Prof. Gual made it clear he is cautiously optimistic about the outlook for Spain and its economy, describing his position as “positive but not naive”, including on the domestic political front.

Without denying the human cost, he explained how Spain has become much more competitive, although the job is not yet over. As a totally open economy, foreign investment has been flooding in to take advantage of Spain’s opportunities, including in real estate. Of course, if foreign investors take fright, they can leave as quickly as they arrived, Prof. Gual pointed out.

He also explained how Spanish firms are just as productive as those in other EU countries like Germany when comparing mid-sized and big companies. Spain’s productivity problem stems from its large number of small companies compared to economies like Germany and the UK. Why so many small companies? Because the administrative environment in Spain discourages companies from growing above a certain size.

I went home realising it’s easy to be pessimistic about the Spanish economy based on headlines, whilst forgetting there are grounds for optimism if you delve into the detail.

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