On August 13th I received another report on International Political Economy from my profesor at the Chicago Business School, Marvin Zonis. Always excellent and touching the real important matters.  This time about South Europe Countries Economy. I have to admit that I was badly hurted by what I read.

Here I leave you the report: TheMediterraneanRimInTurmoil8-13-13

The perspective given about Spain in this report in very pessimistic. It is true economy is bad, but I live  every day here and do not see the Apocalyptic Scenario shown in this report.

There are some good important things that remain stable:

1.- Institutions are solid.

– Even some corruption news about the party in government confirm it. On the contrary, that wouldn´t have reached the press and further investigations (Watergate type)

2.- The Spaniard “mentality” is quickly changing

– Productivity increases: people working harder to secure the jobs they have (Labour cost per unit index show that clearly).

– Public state workers have also increasing productivity and flexibility

– Last labor reform has greatly contributed to this.

3.- Good infrastructures

Spain invested here a lot of the benefits of the good times, and they remain.

4.- Exports growing (contrary to what it is said in the report): I add here Eurostat data, (and 2013 will be even much better)

5.- Credit (there is money – but lack of trust => no liquidity)

Big banks have big inflows of money but they are very reluctant to lend due to the high risk they still see in the economy.

We started the crisis with more than 300 billion of bad building loans, and it is taking a lot of time/effort to digest it. But we do not want to default, or exit the Euro, which perhaps helps in the short term. But we would not be perceive as a serious country in the long term by the international community. And that would be worst.

From all the information I receive, I believe that 2012 was really the “disastrous year”, and that it set a floor.

And while the recovery is going to be very slow for still 2 years, I am confident Spain will come back.

Antonio Mansilla