The European Commission considers that the Spanish economy has undertaken 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, which highlights that the economic recovery was reinforced last year with a 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 underlines that in the coming years economic growth will be robust, although there are downside risks.
The report makes an analysis of the Spanish economy in the 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 social and economic policy of the European Union this year: relaunching investments, continuing structural reforms and establishing 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, it stands out that for the first time in thirty years the economy is in surplus of the current account in a phase of growth, reflecting the growing competitiveness achieved in recent years. The document also highlights the completion of the bank sanitation process, which allows the financial sector to continue stabilizing and strengthening the resistance of the economy.
Regarding the labor market, the Commission underlines the strong creation of employment, above 3%, driven by wage moderation and the greater flexibility introduced with 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, he 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 is noted 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 in the setting of wages 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 Unit Law, which contributes to improving the business climate. The Commission notes 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 assesses the progress made by Spain in complying with the specific recommendations made in 2015. It points out that the reform of the savings bank sector has been completed and that the recent insolvency reforms (Bankruptcy Law and Second Chance Law) will mean 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, make Spain still vulnerable to changes in market sentiment in its perception of Spain. As for the public debt, he points out that the forecast is that it is around 100% of GDP in 2015, reaches its highest level in 2016 and begins to decrease in 2017. The forecast of the Ministry of Economy is that the public debt it closed at 99% of GDP in 2015, the year in which, for the first time since the crisis began, that ratio has decreased compared to the previous year, representing the first change in trend since the crisis began .
He also points out that the public deficit has continued the reduction in 2015 as a result of strong economic growth. In particular, it emphasizes that the growth of domestic demand has allowed a significant increase in tax collection. Despite the tax cut last year, the Commission expects tax revenues to keep pace.
The Commission finally notes that the debt of companies and households continues to decrease in Spain, although it is still at high levels. This deleveraging of the private sector is compatible with the flow of new credit being reaching companies and families with a better financial situation.
