OECD Economic Surveys: Spain

English
Frequency
Every 18 months
ISSN: 
1999-0421 (online)
ISSN: 
1995-3364 (print)
http://dx.doi.org/10.1787/19990421
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OECD’s periodic surveys of the Spanish economy. Each edition surveys the major challenges faced by the country, evaluates the short-term outlook, and makes specific policy recommendations. Special chapters take a more detailed look at specific challenges. Extensive statistical information is included in charts and graphs.

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OECD Economic Surveys: Spain 2017

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Author(s):
OECD
14 Mar 2017
Pages:
136
ISBN:
9789264271876 (EPUB) ; 9789264271869 (PDF) ;9789264271845(print)
http://dx.doi.org/10.1787/eco_surveys-esp-2017-en

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Spain is enjoying a robust recovery from a deep recession and a wide range of structural reforms has contributed to sustainable rises in living standards. Highly accommodative euro-area monetary policy, low oil prices and, more recently, expansionary fiscal policy have all supported domestic demand. Exports have been a particular bright spot, as Spain has resisted the slowdown in global export growth. However, raising well-being and GDP per capita, particularly via productivity increases, and making growth more inclusive remains a challenge. Spain has long suffered from very low productivity growth, which has restrained increases in living standards. Misallocation of capital towards low productivity firms and underinvestment in innovation have dragged down productivity, although more recently capital allocation has been improving. Policies to foster a better allocation of capital and higher productivity include reducing regulatory barriers in product markets that are holding back competition, encouraging higher investment in R&D and innovation and ensuring that capital goes to a wider set of innovative firms. Reducing entry barriers and improving framework conditions would also help to foster green investment. The unemployment rate is gradually falling down thanks to stronger growth, but it remains very high, particularly among the young and long-term unemployed. The high share of long-term unemployed risks loss of skills, disaffection and alienation. Poverty has also risen, mainly due to lack of quality jobs that provide enough hours of paid work to support decent incomes. Part of the answer is continued strong economic growth, but strengthening training and job placement and better minimum income support are crucial.

SPECIAL FEATURES: IMPROVING JOB QUALITY; INNOVATIVE BUSINESS INVESTMENT

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  • Basic statistics of Spain, 2015

    This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.The economic situation and policies of the Spain were reviewed by the Committee on 19 January 2017. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 30 January 2017.The Secretariat’s draft report was prepared for the Committee by Aida Caldera Sánchez, David Haugh, Yosuke Jin and Pilar García Perea under the supervision of Pierre Beynet. Müge Adalet McGowan and Dan Andrews also contributed. Research assistance was provided by Gabor Fulop and secretarial assistance was provided by Sylvie Ricordeau.The previous Survey of the Spain was issued in September 2014.

  • Executive summary

    Euro area member countries that are also members of the OECD (16 countries).

  • Assessment and recommendations

    Spain’s economic recovery, underway since 2013, has been one of the strongest in the OECD thanks to a wide-ranging agenda of structural reform (), highly expansionary euro area monetary policy, easier fiscal policy, and significant repair of the banking system. Dynamic growth and wage moderation have led to strong employment gains, bringing down unemployment from very high levels and providing consumers with more income. Exports have grown strongly despite weak global markets, reflecting improving wage competitiveness and have helped turn a current account deficit into a surplus. Further economic growth at a pace above 2% annually is likely in the short term.

  • Progress in main structural reforms

    This annex reviews action taken on recommendations from previous Surveys since the July 2014 Survey.

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    • Reforms for more and better quality jobs in Spain

      The Spanish economy is growing strongly, but there is a risk that many people are being left behind. Unemployment, especially among young people and the low-skilled, remains very high. About half of all the unemployed have been unemployed for over a year and one third for more than two years. A quarter of all those who are employed are on temporary jobs. Since the global economic crisis, poverty and inequality have increased. An immediate priority is to ensure adequate income support for those most in need. Getting more people into better jobs is crucial to raise living standards and to reduce poverty. In terms of structural policies, this requires continuing to improve activation policies, such as training and job placement, re-skilling and up-skilling the unemployed, preventing youth from leaving the education system under-qualified and better on-the-job-training. More can be done to foster the creation of better quality jobs by reducing barriers to hiring and addressing labour market duality.

    • Fostering innovative business investment in Spain

      Spain has chronically low productivity growth, which undermines its ability to generate higher living standards. Important contributors to low productivity growth are the misallocation of capital to low productivity firms and under-investment in knowledge-based capital. To foster a better allocation of capital a first priority is to better tune bank, capital market and government financing to the needs of new innovative firms. This could be done through better small and medium-sized enterprises (SMEs) bond and loan securitisation tools, reallocating public financing to early stage finance and making it easier for firms to access public innovation funding by shifting some funding from loans to grants for research and development (R&D) projects. Attracting more foreign capital and improving the regulatory framework to increase the return on investment would also help. This could be done by reducing regulatory barriers that hold back competition, improving the neutrality of the tax system, improving pricing signals and reforming insolvency laws.

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