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Eduardo Martínez Abascal, Professor, IESE, University of Navarra

Prophets of catastrophes... without data

Wed, 10 Feb 2010 09:37:21 +0000 Published in Expansion (Madrid)

Coinciding with the Davos summit, where the world's "experts" from the world of Economics and politics meet, we have witnessed an avalanche of negative forecasts about the Spanish Economics , which have been widely reported in the Anglo-Saxon press. One of the gurus, Professor Roubini, has predicted a possible break-up of the European Union. The Financial Times has returned to its two-speed theory, or the two Europes, where, as expected, Portugal, Italy, Greece and Spain are in the caboose (the so-called pigs).

The striking thing is that everyone has given opinions on how bad we are doing and how much worse we are going to do, but they have not given any data (or I have not seen them in the press), and it is also striking that, two years ago, the same media talked about the Spanish miracle, and now Spain is the last in the queue.
It is most likely that we were not so strong before and we are not so bad now.

But let's go to some data. Professor Roubini bases his diagnosis on the following views, which I will contrast with data. High unemployment rate. True, we will reach 20% and 4.5 million unemployed. But, of these, we have to remove 8%, which was the unemployment rate when we were at plenary session of the Executive Council employment and we needed 5 million immigrants! On the other hand, this is already well known. The same thing happened to us in the crisis of 1993, which caused a maximum unemployment rate of 20% in 1995. But from then on, in a few years we had fulfilled all the requirements requirements to join the euro, although nobody expected it. Perhaps Professor Roubini does not remember this, but this is how it is.

The other cause for alarm is Spain's public debt. The fact is that Spain's public debt in 2008 was 40% of GDP, the lowest level of all the most developed European countries (France, 67%; Germany, 69%; Italy, 105%; Great Britain, 52%). It is true that Spain is now close to 55% of GDP, and is expected to reach 75% in 2012. But even this level of debt is comparable to that of our neighbors, which is not to say that we are going to go under with the whole team!

At final. We are not doing well. Nor does the ship seem to be well steered (and perhaps therein lies the problem). But there is no data to think that we are going to sink and leave the
European Union. This is unjustified and damaging alarmism.