The Spanish investment immigration community is paying attention to Spain's financial information: Spanish Minister of Economy Luis de Guindos pointed out on Tuesday (June 18) that he firmly believes that Spain is not far from finally emerging from the recession, although there are current signals indicating that the state of the country's banking sector remains concerning.
Data previously released by the country's central bank showed that the non-performing capital ratio of the banking sector rose for the second consecutive month in April this year, reaching 10.9%. Last year, due to the aftermath of the real estate bubble burst, the banking sector was overwhelmed, forcing the country to request special aid funds from the European Union.
De Guindos believes that the banking sector will still need to raise about 10 billion euros in the next two years to completely clear bad debts. However, this does not hinder the country from regaining growth after being mired in economic recession for a year and a half. The country's Minister of Finance, Cristobal Montoro, has previously expressed similar sentiments.
De Guindos stated that the country's economy is likely to see a turning point in the second quarter of this year, marking the end of the recession. Although the economy experienced a 0.5% quarterly contraction in the first quarter, the recession is likely to be reduced to nearly zero in the second quarter. The country's economy has faced several recessions since the real estate bubble burst in 2008, and industry insiders generally believe that effective recovery may not occur until early 2014.
Previously, the Spanish government had anticipated a 1.3% contraction in the country's Gross Domestic Product (GDP) for the entire year, but De Guindos believes that the recovery may occur earlier than previously expected by the end of the year, which would result in the actual economic contraction being lower than anticipated.
However, industry estimates are not as optimistic. Analysts from Citigroup have stated that the Minister of Economy has underestimated many internal and external adverse factors in his economic outlook. Therefore, the country's economic growth rate will still experience fluctuations, and the tightening measures to increase taxes will also cause additional harm to the economy, meaning that the true recovery of the economy may occur later than the government's expectations.
