Comment 31526

By Diego Méndez (anonymous) | Posted June 05, 2009 at 03:20:45

Where there is a will said: "Spain's GDP per capita is about $20,000 lower than Canada, their real GDP growth has been slower over the past decade and will be sharply negative this year, they've got a big current accounts deficit, and their federal budget deficit is expected to exceed 7% of GDP in 2009."

I agree with you. However, there are a couple of factual errors:

1) Spain's GDP per capita (on PPP terms, which is the right way to measure wealth) is just $8,000 lower than Canada's.

2) Spain's real GDP growth over the past decade has been slightly higher than Canada's.

3) Spain's big current-account deficit financed investment, not consumption, unlike the US and UK (investment in Spain, at over 30% GDP, was one of the highest in the developed world; compare that to 21% in Canada, 19% in the US and 17% in the UK).

4) And finally, annual budget deficits don't matter, what matters is long-term federal debt, which is 36% GDP for Spain and twice as much (70%) for Canada.

But I agree Canada (like much of the world) lacks political will, not money.

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