According to prime minister Mariano Rajoy, Spain has been on the verge of recovery for two years. Rajoy has also promised to bring Spain’s budget deficit to 3% of GDP for two straight years. And EU has extended the timeline for Spain to hit that goal from 2012 to 2013 to 2014 to 2015 and now to 2016.
Last year Spain’s budget deficit was 7.1% and the unemployment rate is nearly 27% with a youth unemployment rate over 56%.
Spain’s Misery Index
Today we can add another piece to Spain’s misery index. Via Google Translate, please consider Credit Contraction Exceeds 6% for First Time.
Despite the efforts, or the good wishes of the Government, the day of the reopening of the credit tap still seems distant. According to the Bank of Spain, loans to the private sector residents, families and businesses have registered a fall of 6.1% in the month of May, the highest percentage in the entire crisis.
The evolution of the total loan portfolio shows that quarter to quarter, month to month, continues to reduce credit volume in rapid steps.
Spain Lending Stats
- February Down 5.5%
- March Down 5.7%
- April Down 5.8%
- May Down 6.1%
- House Purchases Down 3.7% first quarter
- House Purchases Down 4.5% in May
- New Loans Down 26% January-April 2013 vs. January-April 2012
- Small to Medium (SME) business loans Down 15.1% from same period last year
And we are supposed to believe conditions are improving, recovery is just around the corner, and Spain will reduce its budget deficit to 3%.
Mike “Mish” Shedlock