Spain might not be as hard-hit as its Greek neighbor, but the country is grappling with problems of its own that could drag its ETF down further if the country doesn’t push through structural reforms.
Spain may have been unfairly lumped in with other high-deficit countries, but that doesn’t mean all is operating smoothly. Its budget deficit is 11.4% of GDP, unemployment is 19% and the economy shrank 0.1% in the fourth quarter.
Spain’s saving grace is that they have fiscal credibility. The current-account deficit was nearly halved in the first nine months of 2009 compared with the year-earlier period, says Richard Barley for The Wall Street Journal. But the government must push through structural reforms to get the economy moving again, because in the long run, more periods of little to no growth could damage confidence.
- iShares MSCI Spain (NYSEArca: EWP)