The rain in Spain may be over. For the third quarter of 2013, Spain’s GDP grew at a rate of 0.1 percent. That was the first positive reading in the last nine quarters.
The Spanish economy has been contracting or stagnant since 2008. Back in April I wrote a column about the Spanish economy after a visit there to see my son who was doing a semester abroad in San Sebastian to get immersed in the Spanish language and culture.
It was the first time I had been back to Spain after living in Madrid for three years during the late 1960s. When I was there I observed signs of economic recovery.
I was especially impressed by their infrastructure. The highways were in excellent condition. Some of the old roads that were in very poor condition in the 1960s were now modern super highways.
They have a great high speed rail system. Spain is also one of the region’s largest producers of wind energy.
The economy was particularly hard hit in 2008 when the real estate market collapse sent many into unemployment. Their unemployment rate is still unacceptably high, but has shown signs of stabilizing.
Many of the unemployed are recent immigrants who went for the construction jobs and will wind up leaving the country to seek work elsewhere, as they leave the population will contract and the unemployment rate should continue to improve somewhat. The unemployment rate is still above 25 percent.
One of the keys to Spain’s success that I wrote about in April is exports. According to a recent article from Reuters, their exports grew 6.6 percent from January to August to a record $214.6 billion, which is 155.8 billion Euros.
Their chief export products are agricultural, technology and autos. Spain definitely has some of the best food products in the world including wine and olives.
Spanish olives are second to none in my opinion; I am finding it tough to enjoy a martini with American olives in it after savoring the Spanish olives for a few weeks.
The U.S. stock market has been on a tear this year outperforming foreign markets, bonds and commodities like gold and silver. It’s times like this that investors should not get too complacent and remember the importance of diversification.
Just because the Dow and the S&P 500 have been leading doesn’t mean that trend will continue. More attractive valuations may be found elsewhere.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information on his money management service can be found at his blog at www.sellacalloption.com or by calling 775-657-8065. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.