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Tuesday, October 22, 2013

Phone card growth in Spain creates optimism

The Oct. 19, 2013, blog of the Wall Street Journal said the rise in the use of prepaid phone cards in Spain is an indicator that economic conditions are improving in the southern European country. Blog writer David Roman cited a report from mobile telecommunications firm Telefónica SA that said prepaid phone card users in Spain spent on average 12 to 13 euros per month to recharge their cards in 2013, compared to a monthly average of 10 to 11 euros in 2012.

"Telefónica says this is one among precious few forward-looking indicators of economic activity and consumption in the country," Roman stated. "That makes it a useful one, keeping in mind that most of the indicators commonly looked at by analysts and economists, like employment, economic growth and inflation, are backward-looking."

Spain had been mired in the second "dip" of a double-dip recession that began in 2008 with the global economic crisis. Its unemployment rate reportedly exceeded 26 percent in April 2013. But in September 2013, Spanish Prime Minister Mariano Rajoy said Spain's economy expanded 0.1 to 0.2 percent between July and September 2013, which technically means Spain is no longer in a recession.

However, Roman said Spain's prepaid phone card sector has a ways to go before the average amount of monthly spending on prepaid phone cards will match the pre-recession level of 15 euros per user. end of article

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