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LatAm shows economic crises can be overcome, Spaniard says

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(Globalpost/GlobalPost)

Santiago, Apr 26 (EFE).- Latin America offers the "best example" for Spain that economic crises are surmountable, the Inter-American Development Bank's chief economist, Spaniard Jose Juan Ruiz, said here Friday.

"The best way Spain has to recover hope is to look at a continent that has passed through many of the same stories, and to know that you come out of that," he said at an event in Santiago organized by the Spanish Business Council for Competitiveness, or CEC, to present the report "Spain: A Land of Opportunities."

"During the last five years, Latin America should have been a source of experience and shared knowledge," the IDB expert said, referring to the lessons from the region's struggle with severe economic disruptions in the second half of the 20th century.

Turning to the present situation in Spain, Ruiz said his country's "real problem" is its 27 percent unemployment rate, which translates into more than 6 million people without paid work.

Spain lost 2.5 million jobs in 2008-2010, half of them in the once-booming construction sector, he noted.

The bursting of a decade-long real estate bubble in 2007 taught Spain that the growth model of the 1990s and early 2000s "was not sustainable," the economist said.

The economic reforms undertaken by the Spanish government are beginning to bear fruit, Ruiz said, citing a dramatic turnaround in the nation's current account.

Prior to the global financial meltdown, he said, Spain had the world's second-largest current account deficit in absolute terms and the biggest in relation to the size of its economy, reaching 10 percent of GDP in 2007.

Current projections, however, call for Spain to end 2013 with a current account surplus equal to 1 percent of gross domestic product, Ruiz said.

He gave most of the credit for that change to a "significant" increase of exports powered by enhanced competitiveness and reduced labor costs.

"Historically," Ruiz said in subsequent comments to Efe, Spain has been a recipient of foreign direct investment and the country's regulatory framework provides legal security for capital from abroad.

Spanish companies could be "good partners" for Latin American firms seeking access to "more mature markets" and trying to protect themselves from the volatility common to emerging markets, the IDB chief economist said.

Another participant in Friday's forum, former Chile central bank chief Vittorio Corbo, said the Spanish economy has posted "a great gain in competitiveness."

The CEC includes Spanish corporate giants such as Telefonica, El Corte Ingles, Mango, Grupo Barcelo, Banco Santander, Repsol, Acciona, La Caixa, BBVA, Inditex, Grupo Planeta, Mapfre, ACS, Ferrovial, Havas Media Group, Mercadona and Iberdrola.

http://www.globalpost.com/dispatch/news/agencia-efe/130426/latam-shows-economic-crises-can-be-overcome-spaniard-says