The recovery is projected to continue in 2016 and 2017, although at a more moderate pace. Low borrowing rates for businesses and households will keep providing support. Some of the positive forces, including lower oil and other commodity prices and a mildly positive fiscal stimulus, will boost consumption in 2016 but then fade in 2017.
The return to a more neutral fiscal stance is welcome, but public debt remains high. To ensure that public debt is sustainable, the government should stick to its medium-term consolidation path. The unemployment rate and the share of long-term unemployed have fallen, but remain painfully high. More effective active labour market policies will be crucial to help the unemployed get back to work and to further reduce income inequality.
Spain has low productivity growth, hampering its ability to generate sustainable and inclusive growth. Recent structural reforms addressing fragmentation in product and service markets, simplifying business creation, and reforms of labour and financial markets have gone in the right direction. Increased competition, skills and innovation will also be needed to sustainably boost productivity and generate well-paying jobs.
Economic Survey of Spain (survey page)
The Economic Consequences of Brexit: A Taxing Decision (main web page with paper)
Structural reforms in a difficult time (blog + paper)
Public spending efficiency in the OECD (blog + paper)