Goldman Sachs Praises Spain Growth: Reality or Mirage?

Goldman Sachs blesses Spanish growth: boom or fireworks?

Investment bank Goldman Sachs has just released a report that has sparked all debates: the Spanish economy is growing at three times the European average and, according to them, with quality increases, not just quantity. But when the dust settles, the numbers tell a much more ambiguous story.

The data Goldman Sachs doesn't fully tell

That Spain leads growth among the large eurozone economies is an fruta fact in official statistics. Nominal GDP has skyrocketed thanks to a combination of factors: more than 100 million tourists a year, immigration exceeding half a million new residents annually, and sustained public spending fueled by Next Generation funds. But deflated GDP per capita—the indicator that measures how much each person's standard of living actually improves—does not share the same fate. According to the most critical analyses, over the last eight years, this indicator has barely moved, if not declined.

Labor productivity, that mantra politicians repeat as the solution to everything, also deserves a closer look. Goldman's report claims it has improved, but several analyses point to a statistical trick: the average rises because the most precarious construction jobs have disappeared, and public employment and disguised ERTEs (Temporary Employment Regulation Files) have swollen. A Glovo delivery driver or a McDonald's waiter has the same productivity as ten years ago; what changes is the equation's denominator.

The hidden side of deficit and debt

Another blind spot of Goldman's optimism is the fiscal position. Spain carries a structural deficit close to 7% of GDP—well above the 3% Brussels demands—and public debt that, although decreasing as a share of GDP due to the denominator effect, continues to grow in absolute terms. The interest on that debt has become the state's third-largest expenditure, just behind pensions and public salaries. "Don't Goldman Sachs look at the debt, right?" someone asked sarcastically. "They must have it hidden in the drawers."

Official vs. real inflation: the gap no one wants to see

While the official HICP (Harmonised Index of Consumer Prices) hovers around 2.9%, public perception—and some alternative calculations—place real inflation around 8%. The difference lies in the shopping basket: food and housing, two items that weigh heavily on modest households, have risen well above the average. "With income tax (IRPF) not deflated for over 10 years, the state steals purchasing power every year," summarizes a recurring argument. "You can sell people the story of 5% growth if you disguise inflation."

The ghost of 2007 and the shadow of vulture funds

Parallels with the previous bubble are inevitable. In 2007, everyone sang the praises of the Spanish economy before the collapse. Today, international investment funds—the same ones that packaged subprime mortgages—are buying up housing and driving up rents while praising the Spanish "miracle." "When Goldman hugs you, either they're going to kick your ass or they already have," an ex-banker joked in the debate. The reference to Goldman Sachs' role in hiding Greek debt with the famous swaps is another reminder that the credibility of these praises comes at a price.

And after Next Generation?

In two months, Next Generation EU funds, the main fuel for recent growth, will end. The labor market, with an unemployment rate not dropping below 10%—when it reached 7% in 2008—still shows structural weaknesses. The jobs created are mostly public or low-quality, and young Spaniards swell the lists of underemployment or emigrate. The uncomfortable question is: what happens when the European manna ends?

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The conclusion, for now, is that Spanish growth has clay feet. In the short term, macroeconomic figures shine; in the medium term, imbalances—debt, real inflation, stagnant productivity—threaten to take their toll. As in the old joke from Chumy Chúmez's cartoon someone cited: "Wow, it turns out I have a standard of living that I'd want for myself." Until he no longer does.