Spain fails to turn job increase into economic growth

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Spain is failing to turn increased employment into economic growth.

Spain has failed to turn increased employment into economic growth and is lagging behind other euro area countries.

Despite promising data on employment and a better labor market, Spain is still far from reaching the pre-pandemic levels of economic growth observed in 2019.

One of the best indications of the state of the Spanish economy is the data concerning the retail trade. Spain is the only country in the euro area that has not been able to recoup its economic losses due to the COVID crisis. Concretely, the country is 3% lower than the October 2019 figures. This differs greatly from the levels of economic growth of countries such as France (+ 10%), Germany (+ 6%) or Greece, which have recorded in September an increase of almost 6% in retail sales compared to the same month of the previous year.

Based on data from the Sociological Research Center, the main reason for the economic weakness of Spain compared to other members of the euro zone is the climate of mistrust and lack of confidence among the Spanish people. Either people have no savings to spend, or they have decided to keep them for possible situations of economic adversity in the future. Consumer confidence in Spain also remains in decline compared to that of other European Union countries, a consequence of doubts about the growth of gross domestic product (GDP) and the very questionable management of European funds.

The problem is compounded by the rise in the consumer price index (CPI), which soared last February. This inflationary spiral has caused prices to rise, further slowing consumption. The other big burden is the crisis in the supply chain, which not only caused a stock crisis in various Spanish warehouses, but also an increase in the prices of some products due to the increase in transport costs.

All of these factors combined mean that falling unemployment levels, which are actually lower than before the pandemic, fail to offset the various obstacles to economic recovery.

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