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Consequences of Greece's crisis in Spain to be small: expert

Xinhua, July 9, 2015 Adjust font size:

The consequences of Greek debt crisis in Spain will be small and in the short-term, according to Almudena Semur, manager of the Institute of Economic Studies.

Semur told Xinhua that the "turbulences that can affect Spain because of Greece will be small and in the short-term", adding that "the same happens with the rest of Europe."

According to her, financial markets have already ruled out the possibility of big losses in the case of Spain. "The Spanish risk premium experienced a small rise," she said.

Spain's risk premium stood at around 120 points by the end of June and rose to 144 points in a week. After the referendum held in Greece on Sunday, Spain's risk premium rose by around 20 points from Friday closing time to Monday when it closed at 160.30 points.

Spain's risk premium stood at 148 points on Thursday at mid-session, while Greece continues negotiating with the creditors.

Why is Spain protected from the Greek contagion? "Spain has done its homework, we have done adjustments and reforms, we have a vigorous growth", Semur said, adding that "the cost of it will be much higher for the Greeks, they still are not seeing the cost of the decisions."

Spain's economy has grown by 0.9 percent in the first quarter of the year, according to Spain's Statistical Office (INE), while according to the Bank of Spain forecasts, Spain would have grown by 1 percent in the second quarter of 2015.

According to Semur, this growth is the result of "the adjustments and reforms carried out by the government" as well as other factors such as "decreasing prices of oil and the euro depreciation."

Although she is optimistic about the situation, she warned "we cannot fall asleep." "At the moment, we have a vigorous growth and stop implementing reforms and adjustments it is tempting, but (...) we have to go on with the process of fiscal consolidation."

Finally, asked about the consequences of the general elections to be held this year in the country, Semur reiterated that Spain must continue with the reforms and political parties have to be respectful with the measures already implemented.

"They must continue with the process of fiscal consolidation because under no circumstances will markets and European authorities allow us to move away from the deficit commitments we have already accepted," she said. Endit