Campa Says Spain Needs Exports to End ‘Crisis of My Generation’
Spain needs the rest of Europe to recover and pull the economy out of recession as officials try to retool an economy reeling from the worst recession since World War II, Deputy Finance Minister Jose Manuel Campa said.
“This is the crisis of my generation, this is going to identify us as a generation,” said Campa, a Harvard-trained economist, in an interview in Madrid late yesterday. As exports pick up, Spain will return to “very slow positive growth” from the middle of next year, he said.
Campa, 45, who joined Spanish Prime Minister Jose Luis Rodriguez Zapatero’s government in May, says the country’s services and construction industries need to lure more European retirees to the country after a debt-fuelled construction boom turned to bust about 18 months ago. Coupled with the global recession, the property slump has pushed the unemployment rate to more than 18 percent, the highest in Europe.
“What worries me the most now is what are the things we need to do” to promote growth and avoid future crises, Campa said.
Spain’s economy, which created about half the euro region’s new jobs in the five years through 2006, will contract 4 percent this year, the International Monetary Fund said July 8.
Evidence is mounting that the global economy may be starting to recover. Business confidence in France, Spain’s largest trading partner, rose for a fourth month in July and in Germany, the second-largest, industrial production surged the most in 16 years in May.
In the U life insurance rates.S., Federal Reserve Chairman Ben S. Bernanke said this week that the worst housing slump in eight decades appears to be moderating.
Recovery Lag
Spain may have to wait before the recovery filters into its economy. The European Commission says the economy will shrink 1 percent next year compared with a 0.1 percent contraction in the wider region.
As consumers reduce spending and increase savings, Spain’s trade deficit dropped by more than half from a year earlier to 3.3 billion euros ($4.7 billion) in May.
Campa said Spain now needs to revamp services industries such as tourism and catering, which makes up two thirds of the economy, and make the most of its competitive advantages. Spain attracts more than 50 million tourists a year and thousands of retirees have built homes there.
“One is geography and the other one is demographics, and we do see for our natural trading partners demographics are pushing for older, richer populations, so we need to readjust our traditional industries of tourism and residential construction,” he said.
As the European Union’s population ages, the block will by 2060 be home to two workers for every person over 65, according to a study published by the European Commission. That compares with a four-to-one ratio now.
“We will have a period of serious readjustment this year and some of next year,” Campa said.
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