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Interview: Political uncertainty has little impact on Spanish economy: expert

Xinhua, May 7, 2016 Adjust font size:

Political uncertainty in Spain after the inconclusive general elections on Dec. 20 is not having a great impact on the country's economy, professor of economics at IESE Business School in Madrid, Javier Diaz Jimenez, told Xinhua in an interview.

"I think it is not affecting the economy too much taking into account the data we have seen so far," Diaz Jimenez said, "there have been no major changes in this period without a government as the state budgets were already approved."

The 2016 General State Budget was approved in October last year, and according to Diaz Jimenez, this has helped reduce uncertainty caused by a fragmented parliament and the lack of agreement among parties to form government.

Diaz Jimenez believes there is some concern at an international level about the situation in Spain, but emphasized that "consumption and exports remained unchanged," and recognized that "perhaps the only thing where there is a certain relative slowdown is in investments."

"Spain's budget maybe is not as rigorous as it should have been knowing the 2015 deficit data we know now," the economist said.

Spain's public deficit in 2015 closed at 5 percent of the country's gross domestic product (GDP), above the target agreed with the European Union (EU) of 4.2 percent. The government now expects a public deficit of 3.6 percent for 2016 and 2.9 percent for 2017.

"There are two big challenges: one is creating quality, stable jobs with decent wages. The other will be meeting deficit targets," he said.

The European Commission, or the EU executive body, recently forecast Spanish public deficit to be 3.9 percent of GDP for 2016 and 3.1 percent for 2017, although acting Economy Minister Luis de Guindos said that Spain could close 2017 with a public deficit below 3 percent.

Spain will hold fresh general elections on June 26. Latest data from an opinion poll published on Friday said the Popular Party would win the elections, although the percentage of votes would drop slightly compared to the December elections.

The Socialist Party and Podemos are forecast to finish second and third respectively. Endit