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The OECD warns that the crisis in Catalonia can slow growth

The Agency recommends Spain to reduce the differences between indefinite and temporary in the cost of dismissal

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The OECD warns that the crisis in Catalonia can slow growth

The Organization for Economic Cooperation and Development (OECD) has joined alerts on Catalonia that have already launched a multitude of agencies and houses of analysis. "The persistence of tensions in Catalonia could reduce confidence of consumers and companies, curbing domestic demand more than projected," he said in his analysis of Spain published on Tuesday. A very similar comment to those who have already discharged institutions such as Bank of Spain or International Monetary Fund.

Moreover, OECD leaves forecast of growth of Spanish economy for year that comes in 2.3%, just same rate of GDP that government sent to Brussels warning that in 2018 could lose about 3 tenths for Catalonia , that is, about 3 billion euros. For this year, it also projects as executive of Rajoy an increase in GDP of 3.1%. Or what is same, OECD is located in most moderate of all forks of projections made. The Fiscal authority encrypted possible impact between 3,000 and over 12 billion. The Bank of Spain, between 3,000 and 27 billion in two years. These were all hypotical scenarios that depended on how long problem was perpetuated. "Political tensions in Catalonia have raised uncertainty," OECD says.

This is last warning launched by an organism pointing out dangers of insisting on procés. However, minister of Economy, Luis de Guindos, has stated that activity could grow by 2.5% or more if political crisis stops. The Government asserts this because so far only small point-frights have been given in trade, unemployment, hotel overnights and home and car sales, all affected by uncertainty after 1-O. illegal referendum. Nothing that is not Can correct in a few months if conflict fades. Anor thing will be to see if transfers of companies end up subtracting investments and, refore, capacity of growth of Catalan economy in medium and long term. Learn More

  • The Bank of Spain alerts you could lose 27 billion if Catalan crisis persists
  • Government cuts three tenths of GDP growth for 2018 by Catalonia
  • Hotels in Catalonia lose customers, hired nights and lower prices
  • Business escape doesn't come out for free
With respect to 2018 and 2019, so-called club of rich countries predicts a moderation of growth although it will remain in robust levels: 2.3% in 2018 and 2.1% in 2019. "Domestic demand will soften, as impulse provided by oil prices and lower taxes dissipates," OECD says. Although, on or hand, it adds that job creation will sustain domestic demand, and that competitiveness gains will continue to favor exports even if external demand slows. Moreover, monetary policy will continue to support Spain's growth. And that will lower unemployment rate to 15.4% in 2018 and 14% in 2019. At end of 2019 will be placed in 13.5%, organism advances. However, this rate will be "far above that of eurozone" and affects a lot of young and unemployed long-lasting. Hence it recommends reforms. "To improve Spain's productivity growth, additional structural reforms should be prioritized that promote investment and innovation and improve capacities of workforce," he explains. And puts a greater emphasis on usual recipe book to tackle excess of temporality in employment, a scourge on which government is already trying to work with social agents.

In particular, it calls for "reducing cost of dismissal between fixed and temporary contracts to lower duality of labour market and improve quality of employment". That is, if cost of making a temporary one is not very different from that of doing it fixed, n indefinite hiring will be furr promoted. It also insists on improving active employment policies for repositioning and reinforcing vocational training, which in ir view "could improve employment prospects of less skilled by reducing inequality".

Finally, although debt of businesses and families has declined by 55 percentage points of GDP, OECD warns that this process of indebtedness is not over. Especially in construction companies and low-income families. Although he recognizes that Spanish financial system is now stronger, he stresses that he is still facing challenges in medium term because of "low demand for credit and profitability." "Even if delinquency has gone down a lot, it remains relatively high in a few financial institutions," he emphasizes. As for global environment, OECD highlights widespread recovery of countries. However, it strongly emphasizes that growth is not yet how robust it should be and is threatened by excess debt and high prices in financial markets.

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