Goldman: No Recovery for Spain until 2015

By Walter Kurtz, Sober Look

Spain’s large temp labor force (see discussion) should help reduce unemployment quickly, once recovery takes hold. But given the sorry state of the banking system (see post), when do economists actually expect Spain’s economy to begin growing again? The latest forecast from Goldman shows that it will be some three years before even a modest real GDP growth should be expected.

Purple = forecast (source: GS)

What’s amazing is that earlier this year many mainstream economists were projecting a “short and shallow” recession (see discussion). In fact economists have been consistently lowering their forecasts all year. The chart below from Goldman shows the consecutive worsening of the 2013 forecast for Spain’s GDP growth.

Source: GS

Given Spain’s limited ability to grow its debt levels (simply because the market and the EMU will not let them), the debt to GDP ratio is expected to level off just under 100% on a gross basis. And simply for reference (and many people will take issue with this comparison), the US is already at 100% debt to GDP on a gross basis.

Purple = forecast (source: GS)


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Sober Look

Sober Look

Sober Look was founded by Walter Kurtz, a New York based hedge fund manager and credit markets specialist.

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  • The Dork of Cork.

    Irish 2011 transport omnibus was published.

    The highlight of course continues to be the massive collapse of road freight (biggest fall in Europe by a wide margin)
    Y2007 Tonnes carried (thousand) : 299 ,307
    Y2011 Tonnes carried (thousand) : 110 ,260

    A older transport omnibus gives road freight as 314,826 in 2007 ?

    In that 2007 publication 159,865 was road and building site work
    In 2011 30,981

    However all activities are down hugely since 2007 ( delivery of goods to retail , wholesale , factories , households ,other work , import /export……..everything.
    Including even farms (livestock , farm produce ,fertilizer )

    The older 2007 publication

    LUAS Dublin tram seems to be the only bright spot recovering past 2007 passenger levels (although it is a much bigger rail network now )
    With a 5.1% increase over Y2010 passengers ,now standing at 16.5 million & 12.5 million for the red & green lines.
    Whats really a great worry is the decline of Dublin and other areas bus fleets , this after a 20 % ~ drop in countrywide passengers since 2007
    In 2007 Dublin bus fleet was 1,145 vehicles
    In 2011 Dublin bus fleet was 940 vehicles
    In 2007 Cork city bus fleet was 87 vehicles
    In 2011 Cork city bus fleet was 78 vehicles.

    Mainline domestic (Inter city rail ?) passenger numbers seem to have recovered back to their 2007 levels as they now poach the retired domestic air routes but they face stiff competition from a more liberalized (low wage) inter city Bus service that now uses the almost empty new motorway network.
    Y2007 (thousand pas.) :10,537
    Y2011 :10,656

    However Dublin suburb & DART passenger numbers have collapsed
    Y2007 Suburb :13,180
    Y2011 :9,911

    Y2007 :20,224
    Y2011 : 15,924

    However as can be seen across the border these rail declines are almost entirely caused by monetary malice as resource inputs are minimal when trains are full.

    (NIR continue to report record passenger numbers)

    Air passenger numbers were more or less static over this time although almost all regional airports continue to decline.

    I imagine much of Spains transport numbers are like this but perhaps less extreme.
    Although I dislike MMTs private control over the commons money supply without at least the use of these mechansims to subsidize the rail networks of these 2 countries and thus free up surplus oil to do some useful domestic fixed capital work such as Tram and nuclear build these countries will soon enter a economic & energy event horizon.

  • Bond Vigilante

    I think even these projections are too optimistic.