|Spain’s moderate recovery is projected to strengthen gradually in 2014-15. Economic growth will be led mainly by exports, although private consumption will also strengthen, aided by an improving labour market and stronger confidence. Business investment is projected to benefit from the better economic outlook and higher exports. Higher activity will result in positive employment growth, but ample spare capacity will keep inflation low. This will enable further competitiveness gains, although there is a risk of deflation, which would make debt reduction more difficult.
With public debt projected to continue to rise, planned underlying fiscal consolidation should continue, although the automatic stabilisers should be allowed to operate fully in both directions. To accelerate the reduction in unemployment, it is crucial that the government continues to introduce reforms to improve growth and job creation. High priority should be given to activating youth and the long-term unemployed who face substantial training needs.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.