Article published on 10/13/13 in Diario de Avisos by José Alberto León Alonso.
A little over two years ago, in the first quarter of 2011, I titled this column with the name of the surreal Spanish comedy from the 80s “Amanece, que no es poco”, and indeed, then the Canary Islands economy seemed to emerge from the recession and ended up growing 1.7% for the year as a whole due to the tourist push in the first half. Unfortunately, in the summer of 2011 the political crisis of the euro once again plunged our country and almost all of Europe into recession, which has lasted until this moment in which a new dawn seems to begin.
If at the beginning of the crisis there was discussion about the shape it was going to take, symbolizing it with letters: in the shape of a “V”, which implied rapid growth after the fall; of “U”, which signaled a prolonged period of stagnation before rising; of “L”, which assumed a long recession without recovery; or “W” shaped, which implied an intermediate recovery to fall again before the final recovery; It has finally become clear that the crisis in Europe has taken the shape of a “W”, while in the United States and Asia it has taken the shape of a “U” and “V”, respectively, since they emerged from the recession years ago. The errors in the construction of the euro have made us Europeans, and especially the countries of peripheral Europe, suffer more than they should.
But currently the data that seem to point to the exit from the recession are multiple, the most relevant being the behavior of employment. In September 2013, affiliation to social security (S.S.) in the Canary Islands grew by 7,831 people when compared to the previous month, and decreased by 4,385 compared to September 2012. In the Canary Islands, the seasonality of employment is negative during the first seven months of the year and positive from August to December, so it is not an exceptional figure, but it is the speed of the recovery of employment that signals the end of the recession. For the first time since 2006, before the start of the crisis, the average number of social security affiliates has grown (0.5%) in the third quarter of the year when compared to the previous quarter.
The graph represents the interannual variations of social security affiliates by quarter. As can be seen, the line is clearly drawing an imperfect “W”, with an intermediate fall of approximately half the depth of the initial fall, and still with internal annual falls (-1.0% in the third quarter) in the number of affiliates, but the pace of growth is accelerating and it is very likely that it will reach positive figures in the fourth quarter of the year.
The geopolitical situation in Egypt favors job creation in our archipelago, since the winter tourist season in the Canary Islands is historic, which will favor job creation. In fact, our estimates of economic growth for the Canary Islands in 2014 foresee GDP increases of more than 1% and even 1.5%, so next year 2014 jobs will be created with some joy, since the flexibility granted by the 2012 labor reform should allow it with growth of 1%, which did not happen before.
The question on our minds is... if in the summer of 2011 we fell into recession again when we were beginning to grow, what will prevent the same thing from happening again now? The truth is that there is no certainty that this will not happen again. Developed countries continue over-indebted and dependent on the liquidity provided by central banks, there are glimpses bubbles in the raw materials markets that could explode at any moment, and in the meantime an attempt is being made to deflate them without exploding the gigantic Chinese financial-real estate bubble. However, between 2011 and 2013 we have done some of our homework: in Europe the euro is guaranteed by the words of the President of the European Central Bank “we will do whatever is necessary to guarantee the euro and believe me… it will be enough”, and important steps have been taken towards banking union. And in Spain the public banks have been refinanced, which is now solvent; A labor reform has been approved that grants more flexibility to companies to adapt to the changing situation; the public deficit is moving towards control, although its level remains worrying; and for the first time since 1997, Spain is able to finance itself without the need for foreign capital, having eliminated its current account deficit. Whatever comes from outside, we are better prepared to face it. Even so, let's cross our fingers that no external event turns off our light again. We are tired of this crisis.
