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There’s one ‘real success story’ in the euro zone

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Amid the political uncertainty across Europe, Greece's debt troubles and Italy's banking crisis, there is one nation showing signs of life.

A solid growth rate, strong business activity and rising employment indicate that Spain is the "real success story" in the euro zone, economists told CNBC on Wednesday.

"If you forget Germany, Spain is the real success story in this business cycle," Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, told CNBC over the phone.

Government data released this week showed that Spain's economic growth accelerated 3.3 percent year-on-year in 2016. On Monday, IHS Markit said in its services PMI report that companies took on extra staff in December, extending the current sequence of job creation to 27 months. Figures also indicated an increase in both business activity and new orders.

Federico Santi, analyst at Eurasia group, told CNBC over the phone, that "Spain is one of the most positive stories in the euro zone," thanks to a strong reform implementation over the last few years, mainly in the labor market and the banking sector.

"The fiscal stance is much more growth friendly," he added.

However, the Spanish economy is still struggling with a budget deficit and high levels of unemployment.

According to projections from the European Commission, Spain's deficit should reach 4.6 percent of GDP in 2016 – well above the 3 percent threshold deemed "acceptable" in European fiscal rules.

Unemployment is one of the highest across the region. Eurostat, the EU's statistics office, said this week that the jobless rate stood at 19.2 percent in November compared to an average of 9.8 percent in the euro area.

But analysts have downplayed these figures. Vistesen from Pantheon Macroeconomics said that the figures are somehow "distorted" because many Spaniards have gone back to studying or are working without being registered. But above all the unemployment numbers have declined over the last few years. It was 22.5 percent in 2015.

It is worth noting that the economic recovery in 2016 took place amid political uncertainty. Spain was without an official government for several months and had to repeat a general election to try to overcome the political impasse.

"The political uncertainty didn't do anything to growth," Vistesen said, explaining that the failed attempts to form a coalition government were never raising questions over Spain's membership of the euro and the EU.

Looking to 2017, analysts expect Spain to continue growing, though at a slightly slower pace than in 2016. The European Commission's forecasts a rate of 2.3 percent.

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