Is Spain Far Worse Off Than It Looks?

That's the allegation in a widely circulated paper by an anonymous writer. The paper claims that Spain overstated its GDP from 2007-2009, understated the country’s decline in growth by as much as 14.2 per cent.


FT Alphaville ran an excerpt. The full paper can be read over at ZeroHedge.

The central argument of the paper is that several indicators of Spain's economy cast doubt on the official statistics. Spain's unemployment rate, for instance, has risen much faster than you'd expect given the modesty of the officially reported decline in GDP.

The author also examines declines in construction, industrial and service sectors, arguing that there's no way Spain's economy could have declined by just 3.1% from 2007 to 2009 while these sectors declined at far greater levels.

The anonymous writer estimates that the real decline in Spain's GDP was as much as 17.3%.

Of course, there's been some criticism of the FT for detailing the arguments of an anonymously written paper. Most of this, however, is off-base. The arguments and evidence should stand on their own merits, regardless of whether we know the identity of the author.

"We ran it past some of our economist contacts (both independent and at major banks) to see what they made of it, and they all thought the discrepencies were interesting and could not easily be explained,"

Tracy Alloway of FT Alphaville explains.

There's a great debate over the paper in FT Alphaville's comment section, which you can read here.

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