Here’s Why Spain Is an Economic Bright Spot in the Eurozone


Much like the United States, the eurozone has been struggling through an economic lull recently — with low inflation and unemployment. Still, while earlier in January it was reported that both Greece and Spain could be dragging the eurozone towards stagnation, with the latter possibly on the edge of deflation, this week brings slightly brighter news.

According to the Wall Street Journal, service and private sectors in the eurozone showed expansion in December, partially attributable to a boost in Spain’s recovery that combated poor results in France. The Purchasing Managers Index give a report of activity within the private sector, and while it showed an improvement in eurozone growth in recent months, actual data was more modest. The economy had a mere 0.1 percent improvement in months leading up to September. The fourth quarter results won’t come out until February.

“The latest services PMI data provide real optimism that in 2014 we could finally see the start of a meaninful economic recovery in Spain. Activity and new business each rose at rates not seen since before the economic crisis, although the extent to which companies are relying on discounting to support growth of orders remains a worry,” Andrew Harker, an economist with Markit, told the Wall Street Journal.

There has also been a silver lining on the job market end, with employment numbers offering some hope for improved economic growth as surveys revealed that job cuts had decreased and unemployment looks like it may continue its improvement since October.

Despite the improvements however, improvement across the eurozone, with the exception of Germany, has largely been slow. Early in December the European Central Bank said that it would step in to help if inflation continued to remain too low in the eurozone — a policy that would likely be unpopular with countries like Germany that prefer hands off tactics.