I don’t have time to go into this much further right now, but Spain’s Current Account Deficit is ballooning enormously. According to figures realesed by the Bank of Spain today, Spain?s trade deficit increased to 6.56 billion euros in March. The deficit was up from 4.0 billion euros in the same month a year earlier. The full report from the Bank of Spain shows that:
El d?ficit acumulado de la balanza comercial se elev? en los tres primeros
meses del a?o hasta 14.736,5 millones de euros, desde 9.734,8 millones en igual per?odo del a?o anterior. En el per?odo enero-marzo, las exportaciones de mercanc?as aumentaron un 1,7%, en tasa interanual, mientras que las importaciones crecieron a un ritmo sensiblemente mayor, un 12,3%.
ie that the accumulated deficit on the commercial balance in the first 3 months rose from 9,734.8 millon euros, to 14,736.5, (an increase of 51% y-o-y). Exports increased 1.7% whilst imports increased 12.3%. Last year Spain had a trade deficit of 5% GDP, at this rate we could be heading for the 7-8% range in 2005. This *is* unsustainable, but no-one has any idea what to do about it.
In this sentence:
“Imports increased 1.7% whilst exports increased 12.3%.”
it should probably be exports that increased 1.7% and imports that increased 12.3%.
“it should probably be”
Whoops, thanks, correcting now.
Machine translations may be unreadable, but they are possibly more reliable than human ones :).
Are you telling us that Spain needs to raise interest rates or devalue? Or is it possible to brutally raise taxes to quench imports?
“to raise interest rates or devalue”
Both, and urgently, but you tell me how.
“Or is it possible to brutally raise taxes to quench imports?”
Obviously you could choke-off the economy by raising taxes, but you wouldn’t change the % of domestic against foreign goods purchased, possibly you would do the opposite (remember you can’t raise tarrifs). Spain has a more or less balanced fiscal situation, no substantial deficit, and debt low as a % of GDP.