Spain is immersed in a prolonged recession that has been compounded by the continuing crisis in the euro area. The path to recovery has been launched, but will require full implementation of reforms and some additional measures to restore confidence in the financial sector, redress public finances and bring down high unemployment, according to the OECD’s latest Economic Survey of Spain.
OECD Secretary-General Angel Gurría welcomes the Spanish government's budget and the economic policy measures announced yesterday.
The Spanish economy experienced significantly weaker labour productivity growth than other OECD economies and failed to catch up with the most advanced economies in the period 1996-2007. In recent years labour productivity growth has accelerated, but this recovery is likely to be due to cyclical and temporary factors.
Country Notes from OECD Economic Policy Reforms: Going for growth 2011 presenting OECD recommendations for structural reform priorities for individual countries.
Economic recovery appears to have come close to a halt in the major industrialised economies, with falling household and business confidence affecting both world trade and employment, according to Angel Gurría. Growth remains strong in most emerging economies, albeit at a more moderate pace.
Spain’s government has introduced ambitious consolidation measures, which should yield a sizeable improvement in discretionary fiscal efforts.
After steady employment growth since the 1990s, Spain has experienced the sharpest increase in unemployment among OECD countries during the crisis, amplified by structural problems of the labour market.
The limits for extraction of natural resources have largely been reached and climate change is expected to continue lowering natural water endowments markedly in future especially in dry areas of the country
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This note is taken from Chapter 3 of Economic Policy Reforms: Going for Growth 2010.
Economic forecasts for GDP, unemployment, inflation and fiscal balance.