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Perceptions of Spain are improving, business leaders say

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(Globalpost/GlobalPost)

Chicago, May 7 (EFE).- Foreign investors' perceptions of Spain are changing for the better, the executive director of the Spanish Business Council for Competitiveness, or CEC, said here Tuesday.

"The principal reflection of that change is the risk premium," Fernando Casado told Efe, referring to the gap in the interest Spain must offer to sell bonds and the lower financing costs enjoyed by Germany, the strongest economy in the European Union.

"The fact that the risk premium has fallen means that the perception of the situation now is not as bad as when it was at 600 (basis) points," he said after the presentation in Chicago of the CEC report "Spain: A Land of Opportunities."

The CEC was created by 17 of Spain's leading corporations and the Instituto de la Empresa Familiar (Family Business Institute).

"Our country has some important strengths and the adequate foundation to change the economic model and move from a model based on construction and domestic demand to another based on competitive sectors and exports," Casado said.

He devoted part of the presentation in Chicago to explaining what prompted the CEC to prepare and circulate the report.

"The perception that was held of the Spanish economy was worse than the reality. Nobody talked about the strengths," Casado told around a hundred investors, fund managers and other professionals.

Joining the CEC director was Peterson Institute Senior Fellow Angel Ubide, who was also part of earlier presentations in New York, Cambridge, Massachusetts, and Washington.

"While the situation (in Spain) is tough, certainly the worst is behind us," the economist said.

He pointed to the "tremendous reduction" of Spain's public deficit, substantial debt-deleveraging by firms and households and the ability of the country's autonomous regions to cut spending and avoid widely predicted defaults.

In subsequent comments to Efe, Ubide stressed the importance of Europe's changing view of austerity.

"Starting from the IMF spring meeting, there has been a change of tone in the discussion about the necessity to keep tightening fiscal policies. We can keep doing fiscal tightening, but we need to support it in another way, and that's where the ECB (European Central Bank) lowering of the interest rates has participated in an important way," he said.

"This has convinced investors a little, from what we see in the behavior of the markets, that Spain is becoming a normal country and that, accordingly, when the economy is weak, interest rates fall instead of rising," Ubide said.

"This way, instead of having to paddle upstream, if the situation worsens from the point of view of growth, the interest rates fall and that helps us," he added.

http://www.globalpost.com/dispatch/news/agencia-efe/130507/perceptions-spain-are-improving-business-leaders-say