Spain Gets Latest IMF Caution Flag

Investing

Published: June 21, 2011 12:46 pm

Economists and investors have enough to worry about in Europe. Greece is in a state of collapse. There are concerns that Portugal and Ireland could follow.

Add Spain to the list of nations that the IMF says deserve some concern. Its new “Spain—2011 Article IV Consultation Concluding Statement of the Mission” issued in Madrid says that the country is on the right track but that any departure from reform programs could push the nation’s financial fortunes off track.

Exports could help Spain’s recovery rate rise to 1.5% to 2% GDP improvement.But,

The policy agenda remains challenging and urgent – there can be no let up in the reform momentum. Unwinding accumulated imbalances and reallocating resources across sectors will take years and many difficult policy choices. And some of the underlying problems of the Spanish economy, especially weak productivity growth and the dysfunctional labor market, remain to be fully addressed

Unemployment has to be at the top of that list. It is currently above 21% and 2% GDP growth is not anywhere near sufficient to change the jobless rate. And, there is no such thing as a “jobless recovery” when one fifth of the working population have no jobs

Douglas A. McIntyre

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