The Spanish Economy: On the Mend

THE sales hut on an empty building plot in Aravaca is a symbol of hope. Here, in a desirable Madrid suburb, new flats are being sold off-plan in a five-storey condominium that is due to be finished within two years. In a country with half a million new homes lying empty after its spectacular housing bubble, that may seem like madness. Yet developers are returning to a handful of select areas where the building bust is over. Two months after Aravaca’s 49 flats went on sale, fewer than half are left.After five years of double-dip recession and rampant job destruction, Spain’s downward lurch has stopped. Growth has returned; Mariano Rajoy, the prime minister, says it is here to stay. The Madrid stockmarket is euphoric, government-bond yields have tumbled below pre-crisis levels and foreign investors are bargain-hunting. “Spain is back,” trumpeted JPMorgan Chase, a bank, in a recent report.Yet GDP growth, estimated at 0.3% in the fourth quarter, is neither as vigorous nor as ironclad as Mr Rajoy claims. Analysts predict a measly 1% expansion in 2014 as the economy is held back by heavy private debts. The IMF puts Spain near the bottom of its global growth chart for two years. And, as wages fall and a quarter of workers remain jobless, most Spaniards have yet to notice the uptick. Workers like Milagros Morago, whose income fell by 40% after a new subcontractor took over Madrid’s…

The Economist: Europe