This article talks about the Spanish Economy , which is the euro-zones fourth largest economy . The economy contracted dramatically by 0.7 % . The economy which is still trying to recover form the double dip recession is facing may problems.The consumers have cut down spending and the unemployment rate currently at 26% are causing problems for the economy to grow and come back on track.
The increase in Value Added Tax (VAT) lead to a rise in prices of goods and services and this lead to the retail sales fall by 10% because consumers are not willing to spend . To make Spanish firms more competitive the government has passed a law which would allow companies with falling sales to cut wages for its employees. These actions could have negative effects in the long run.
http://www.guardian.co.uk/world/2013/jan/30/spain-gdp-economy-shrinks
I really enjoyed this article. It was interesting to see how fast Spain is tanking; it's just a mess. From Spain's high unemployment rate to their banks being bailed out for almost 100 billion Euros. I feel like at this point it's more of trying to keep the boat from sinking as fast,rather than charting a course.
ReplyDeleteThe article presents a very depressing picture of Spain. A double dip recession is not very uncommon and this may just turn out to be a short-term problem. Hence,the Spanish Government should not take steps that would be harmful in the long-run in order to minimize short-term effects. They should only be worried about 2 things- unemployment and contraction of the economy.
ReplyDeleteI have been following what has been going on in Spain for a while now and I know that everything just seems to be getting worse from when I first started learning about what has been happening in Europe. I feel that the increase in prices of goods and services only makes it harder on the Spanish people forcing people to save their money more and this makes it even harder for things to be more affordable due to wage cuts. Hopefully, Spain can see some sort of improvement in their economy in the near future.
ReplyDeleteAbsolutely true , the Spanish economy taking all these harsh decisions is an attempt to help the economy come back on track which i think is necessary but it could have bad long term effects.
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