With the U.S. still struggling to fully rebound from the Great Recession, President Obama on Monday lauded Spanish Prime Minister Mariano Rajoy for the progress he’s made in stabilizing his country’s economy and shepherding Spain to back-to-back quarters of fiscal growth.
Mr. Rajoy’s trip to Washington, his first since being elected in November 2011, came on the same day that Spanish officials said the nation’s economy expanded by about 0.3 percent in the fourth quarter of 2013 — a modest figure by all accounts, but one that’s welcome news after years of negative growth and jobless rates that still top 20 percent.
The negative growth streak, which stood for more than two years, finally was broken in the third quarter of last year, when Spain’s economy grew by 0.1 percent.
The good news out of Spain comes on the heels of a weak December in the U.S., with just 74,000 new jobs created last month, the weakest month in about three years.
For Spain, on the other hand, December represented a key turning point in recovering from a deep recession.
Moody’s ratings agency last month upgraded Spain’s economic outlook from “negative” to “stable.” Standard & Poor’s also has raised its economic outlook for Spain, lending weight to the notion that the nation may finally be seeing light at the end of the tunnel.
“I congratulated the prime minister on the progress that’s been made in stabilizing the economy, moving into growth, reducing the deficit and being able to return to the financial markets in a way that reflects sound leadership,” Mr. Obama said after his meeting with Mr. Rajoy, though he added that Spain still has a long way to go as it contends with a fragile economy and persistently high unemployment rates.
Still, Spanish officials clearly are heartened by Monday’s news. Spanish Economy Minister Luis de Guindos said Monday that, after years of recession, his nation finally is in a “different scenario.”
To a certain degree, analysts credit the approach of Mr. Rajoy — a conservative elected after frustration with more liberal leaders — for turning around Spain’s economy, which has included loosening the grip of organized labor and making it easier for companies to hire and fire as they please.
He’s also slashed government spending and promised to cut taxes for low-income earners in 2014, while instituting a slate of reforms to the nation’s banking sector.
“They are turning around … things could look better from here,” said Angel Ubide, a senior fellow at the Peterson Institute for International Economics who specializes in central banking and European affairs. “The recession is over. The question is what happens from here and how long it takes for the recovery to accelerate.”
Analysts caution against being overly optimistic after the modest good news out of Spain and stress that, after how far the nation’s economy had sunk, any progress must be put into context.
“We’re seeing better news, but things have been so bad there,” said Salim Furth, a senior policy analyst for macroeconomics at the conservative Heritage Foundation. “The direction Rajoy is going is the right one … but it could be 10 or 15 years before they make up what they’ve lost.”
While in Washington, Mr. Rajoy also addressed European concerns over U.S. snooping programs. Spain is just one nation that has expressed anger at the scope of National Security Agency surveillance programs, but he told reporters Monday that his concerns have been addressed.
He said he’s been in touch with U.S. officials who explained the nature and depth of those programs, and “the explanations were satisfactory.”