The European Commission considers that the Spanish economy has embarked on a significant change of course in recent years due to the implementation of structural reforms. This is stated in the report Spain 2016, presented today, highlighting that the economic recovery was strengthened last year with growth of 3.2%, thanks to the boost in private demand, improved access to credit, increased confidence of economic agents and the fall in the price of oil. The report stresses that economic growth will be robust in the coming years, although there are downside risks.
The report analyzes the Spanish economy in light of the 2016 Annual Growth Assessment prepared by the European Commission, which was published on November 26. The evaluation establishes three priorities for the European Union's social and economic policy this year: relaunch investments, continue with structural reforms and establish a responsible fiscal policy. The document also analyzes the progress made by the Spanish economy in the objectives of the Europe 2020 strategy.
In its report, the Commission notes that Spain has entered a path of balanced economic growth and considers that the challenge is to maintain this trend in the long term. Among other elements, he highlights that for the first time in thirty years the economy is in current account surplus in a growth phase, reflecting the increasing competitiveness achieved in recent years. The document also highlights that the bank consolidation process has been completed, allowing the financial sector to continue to stabilize and strengthen the resistance of the economy.
Regarding the labor market, the Commission underlines the strong job creation, above 3%, driven by wage moderation and the greater flexibility introduced with the labor reform. He adds that regulatory changes in the labor market have accelerated the response of employment to GDP growth. Compared to previous crises, the Spanish economy creates jobs at an earlier stage of recovery. However, it points out that the level of unemployment remains high, especially among young people and the long-term unemployed. Despite the improvement in the labor market, it highlights that the indicators of poverty and social exclusion remain at high levels due to the impact of the crisis.
In particular, it considers that the new regulatory framework for the negotiation of collective agreements represents a step forward for wage setting and that progress has been made in the area of active employment policies. It also makes a positive assessment of the implementation of the Market Unity Law, which contributes to improving the business climate. The Commission points out that there are still areas in which reforms can continue to be deepened, such as the professional services sector and a greater improvement in the transparency of public finances.
The European Commission document positively values the progress made by Spain in complying with the specific recommendations made in 2015. It indicates that the reform of the savings bank sector has been completed and that the recent reforms in insolvencies (Bankruptcy Law and Second Chance Law) will lead to an improvement in the quality of bank assets.
The report warns that the still high level of indebtedness of the Spanish economy, both public and private, makes Spain still vulnerable to changes in market sentiment in its perception of Spain. Regarding public debt, he points out that the forecast is that it will be around 100% of GDP in 2015, reach its highest level in 2016 and begin to decrease in 2017. The forecast of the Ministry of Economy is that public debt closed at 99% of GDP in 2015, the year in which, for the first time since the crisis began, this ratio has decreased in relation to the previous year, representing the first change in trend since the crisis began. .
It also notes that the public deficit has continued to decrease in 2015 as a consequence of strong economic growth. In particular, he underlines that the growth in domestic demand has allowed a significant increase in tax collection. Despite last year's tax cut, the Commission expects tax revenue to remain steady.
Lastly, the Commission notes that the debt of companies and households continues to decrease in Spain, although it still remains at high levels. This deleveraging of the private sector is compatible with the fact that the flow of new credit is reaching companies and families with a better financial situation.