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Fiscal Policy - For Spain to get out of recession, they will need to increase taxes and reduce government spending (Austerity measures - reduce spending on unemployment benefits, free health care and free education, pension).  For IMF and EU to "forgive" or to "write-off" the loans.

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Fiscal Policy - For Spain to get out of recession, they will need to increase taxes and reduce government spending (Austerity measures - reduce spending on unemployment benefits, free health care and free education, pension).  For IMF and EU to "forgive" or to "write-off" the loans.

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An employed person is defined as anyone that is aged 15 years or over who has completed at least one hour of work with wages or at least 15 hours per week as an unpaid worker in a family business.

It is not an easy task bringing a country to full employment. Governments around the world are scratching their heads on how to compete with other countries to increase employment or decrease unemployment. This is because employment and unemployment are the driving forces behind economic growth and stagnation.

The recent surges in tourism has helped to significantly decrease the unemployment rate of Spain by creating almost 84,000 jobs. This may seem like Spains economy is taking a recovery in its economy. However , the tourism industry will not always experience a surge . It is based on seasonal periods. Therefore , it is difficult to always maintain a surge in tourism throughout the year. If the numbers of tourism starts to decline , the jobs that are created because of the surge in tourism would be lost and unemployment rates may fall back to what it was before .

Hence , even though tourism plays a huge role in improving unemployment statistics , it is not a constant affair.

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Spanish economic growth slowed in the third quarter as Acting Prime Minister Mariano Rajoy moves closer to forming a government after 10 months stuck in deadlock.

Output grew 0.7 percent in the three months through September, after expanding 0.8 percent in the second quarter, the Madrid-based National Statistics Office said Friday in a preliminary release. That matches the median estimate in a Bloomberg survey of 24 economists. From a year ago, the economy expanded 3.2 percent.

While the report didn't break down GDP components, economists say sustained consumer strength and export activity helped maintain the pace of growth, as the impact of past reforms and one-off stimulus such as lower oil prices fades. Data on Thursday showed the nation's unemployment rate fell to the lowest in more than six years in the third quarter, although the bulk of the new jobs were short-term contracts.

"Consumption should remain the key engine of growth for the quarter as the number and quality of jobs improve," said Geoffrey Minne, an economist at ING Bank in Brussels. "Net exports should also be a positive driver, while private investment has probably reached its peak and the effect of reforms progressively fade. Even so, the outlook is positive."

After two inconclusive elections, Rajoy looks set to secure a second term in office after the Socialist party, the second biggest force in parliament, lifted a veto on his candidacy on Sunday in an historic u-turn decision. Rajoy faces a confidence vote this week which should culminate with the 61-year-old being appointed prime minister by parliament on Saturday.

Inflation Rate

A separate release showed consumer prices on an EU-harmonized basis rose 0.5 percent in October from a year earlier, marking the fastest pace in more than three years and reversing a trend that had seen prices stuck at zero or lower. The statistics office said the figures, which are preliminary, were mostly due to an increase in energy prices and utility bills.

While the economy has shown resilience, expanding steadily since it emerged from recession in 2013, the Bank of Spain sees risks of fiscal slippages due to the lack of reforms even as the nation grows, calling on the next administration to take on restrictive measures to curb public spending. Once in office, Rajoy faces an uphill battle to approve a budget for 2017 for which he'll need the support of the Socialists.

Spain faces demands from the European Commission, which oversees national budgets, to narrow its public deficit to 4.6 percent of output this year and 3.1 percent in 2017. The nation narrowly avoided a fine for missing its deficit-reduction goal last year by almost 1 percentage point. A decision to freeze structural EU funds to Spain over its budget infractions is still being considered.

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Spain's Economic Growth Slows as Rajoy Gets Closer to Power

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Spanish economic growth slowed in the third quarter as Acting Prime Minister Mariano Rajoy moves closer to forming a government after 10 months stuck in deadlock. Output grew 0.7 percent in the three months through September, after expanding 0.8 percent in the second quarter, the Madrid-based National Statistics Office said Friday in a preliminary release.

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Inflation refers to a sustained and continuous increase in the general level of prices of goods and services in the economy.
Purchasing power is the real tangible goods and intangible services that the dollar can buy.
Inflation however, erodes the purchasing power of money.

Funcas believes that Spain will have an average annual inflation rate of 1.5% in 2017 due to factors like an increase in the price of oil.

What Funcas believes is called cost-push inflation. Cost-push inflation is one of the two types of causes of inflation. This means that the primary reason of inflation is the increase in the cost of production (for example, crude oil).

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Spanish think tank Funcas said this week it forecasts an average annual inflation rate in Spain of 1.5% in 2017, although it is feasible that this could reach 2% in one month or other during the first half of next year due to factors like the uptick in oil prices.

But in spite of higher inflation and the fact that Spanish prices may reach the same level as those in the Eurozone as a whole from time to time in 2017, Funcas believes that Spain will maintain its competitiveness in exports and imports next year. That's because for there to be any loss in this area the negative differential with the Eurozone needs to be "persistent and more structural."

Fernández also said that Spain's underlying inflation remains favourable. For that reason, she insisted on not predicting for the time being any economic fundamentals which would lead to a sustained increase in inflation above that in the Eurozone.

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Spain Inflation Could Rise To 2% In 2017 - The Corner

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Spanish think tank Funcas said this week it forecasts an average annual inflation rate in Spain of 1.5% in 2017, although it is feasible that this could reach 2% in one month or other during the first half of next year due to factors like the uptick in oil prices.

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Unemployed refers to anyone aged 15 years old and above who is willing and able to work and is actively seeking for employment buy has not found one yet.
Since Spain has just gone through a recession, there is Cyclical unemployment rate at play here.
Cyclical unemployment is caused by the lack of jobs due to a recession (i.e retrenchment). Along with other types of unemployment under the Natural rate of unemployment (Structural, Frictional, Seasonal), the Spanish government is intervening to reduce the unemployment.

The Spanish government is providing training and workforce development, which improves the overall employ-ability of the Spanish people. With upgraded skills, Structural unemployment can be reduced because now, there will be less mismatch of skills.

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(MissionNewswire) The Don Bosco Foundation Project in Córdoba, a city in the southern Spanish region of Andalusia, is helping youth gain the skills needed for stable employment. The project helps to address the high unemployment rate faced by youth in Spain by building connections between employers in need of a new skilled workforce and the youth who need employment. One of the ways Spain is addressing this ongoing issue is by developing networks of youth programs, employers and state organizations.

One of the networks established is the Incorpora Program promoted by the La Caixa Bank. Salesian missionaries and staff with the Don Bosco Foundation Project have joined this network of providers and are working in partnership with Spain's Center for the Bata Cooperation Initiatives, the Association of Teachers, the Association for the Protection of Children and Adolescents and the Red Cross of Córdoba. These five organizations are working together to manage and facilitate the Incorpora Program. They also have the involvement of 78 local companies that have joined this program to help put youth to work.

In operation since 2006, the Incorpora Program is aimed at the most vulnerable groups of society including young people at risk of exclusion, people with disabilities and those who have faced long-term unemployment as well as ex-convicts, immigrants and victims of gender violence. The Incorpora Program through its providers, specifically the Don Bosco Foundation, specializes in developing training programs that collaborate directly with the business sector so that students learn marketable skills and make an easier transition from coursework into employment. It encourages the business community to take an active role in program development as well as meeting with the students to help shape standards and the students' academic and social development, ensuring greater opportunities for employment after graduation.

"With so many young people out of work and facing conditions of poverty in Spain, it is vital for Salesian workforce development programs to respond to market demand," says Father Mark Hyde, executive director of Salesian Missions, the U.S. development arm of the Salesians of Don Bosco. "Students in these programs have a real opportunity to enter the workforce prepared both in terms of the skills they have learned and in their social development, ensuring a lifelong ability to retain livable wage employment and escape poverty."

Hard hit by the current economic troubles in Europe, Spain now has the greatest inequality of the 27 countries of the European Union. According to the World Bank, close to 25 percent of Spanish workers are unemployed and a growing number of them can't afford to buy enough food to live. One in five citizens is living below the poverty line and poor youth with too few employable skills struggle the most to find and retain stable employment.

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SOURCES:

ANS - Spain - Working together to fight youth unemployment

World Bank - Spain

(Photo courtesy of ANS)

OTHER Salesian News (not SM specific) Spain

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SPAIN: Providing Training, Workforce Development for Unemployed Youth

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(MissionNewswire ) The Don Bosco Foundation Project in Córdoba, a city in the southern Spanish region of Andalusia, is helping youth gain the skills needed for stable employment. The project helps to address the high unemployment rate faced by youth in Spain by building connections between employers in need of a new skilled workforce and the youth who need employment.

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A business cycle is alternating periods of economic growth and economic decline, which can be measure in changes in real Gross Domestic Product(GDP).

An expansion or a recovery is a business cycle where the real GDP increases, unemployment rates fall, business profits improves and production capacity is more utilized. In an expansion. there is inflationary pressure as the price level increases.

Spain is going through an expansion as their GDP increases by 0.7%. Although this is peculiar since Spain is going through a political reform and has barely no government, this adheres to the Classical thinking where Adam Smith believed that no government intervention is needed as the economy will recover on it's own. Supply creates its own demand and recessions naturally cure themselves.

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Spain's economy probably maintained its pace this quarter, supported by resilient internal demand and "intense" job creation, the country's central bank said.

The Bank of Spain estimates that gross domestic product will show an increase in output of 0.7 percent in the three months through December, unchanged from the third quarter. The central bank noted the recovery continues to be bolstered by the strength of the nation's internal spending push, pegged to more employment and favorable financing conditions for households. Corporate investment may also show signs of renewed dynamism after losing steam in the previous quarter, the institution added.

The central bank's outlook released Wednesday follows a string of better than expected data including an index of services and a gauge of the manufacturing sector. Both of them beat analyst expectations for November and showed a pickup from the previous month, while labor costs fell sharply in the previous three-month period.

The latest health check on the Spanish economy comes as Prime Minister Mariano Rajoy seeks cross-party agreement to approve a budget for 2017. The Socialists, the historic rivals of Rajoy's conservative People's Party, have so far rejected supporting the government's plans. Still the two parties have agreed on a series of measures including a minimum wage increase, corporate tax measures and a limit on national spending that are seen as prelude to a budget agreement.

In an interview on Tuesday, Economy Minister Luis de Guindos predicted the budget could be approved before the summer, while forecasting that the country's fourth-quarter expansion could be in the region of 0.7 percent to 0.8 percent, or "slightly" stronger than the third quarter. Guindos said all available indicators have shown momentum and emphasized that political uncertainty had dissipated.

IMF Reforms

Even so, the International Monetary Fund called on Spain to pursue further reforms, tackle long-term unemployment and consider a revision of its sales tax rate to continue the recovery. The government has repeatedly rejected hiking taxes that could hurt the consumer-led recovery such as income and sales tax, targeting corporations instead.

The Bank of Spain's latest estimate for the fourth quarter comes after saying it expects the nation to grow 3.2 percent this year while upgrading its estimate to 2.5 percent for next year, matching the government's official projections.

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Spain Probably Expanded 0.7% This Quarter, Central Bank Says

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Spain's economy probably maintained its pace this quarter, supported by resilient internal demand and "intense" job creation, the country's central bank said. The Bank of Spain estimates that gross domestic product will show an increase in output of 0.7 percent in the three months through December, unchanged from the third quarter.