Spain: Structural reforms needed

Output is projected to fall by 3.5% in 2009 and by a further 0.25% in 2010 before recovering at a slow rate in 2011. The unemployment rate is expected to peak close to 20% in 2010. Inflation may rise temporarily in 2010, reflecting higher oil prices and projected value added tax increases, but is expected to fall to close to zero in 2011. The decline in housing transactions has levelled off and the fall in house prices has flattened.

The planned tightening of the fiscal stance should be deferred to 2011 to allow the economy to recover more firmly. However, structural reforms, including steps to curb age-related spending increases, need to be implemented to ensure long-term fiscal sustainability. Programmes to support construction of social housing should be halted: support to low-income households should be provided via means-tested cash benefits earmarked to rent payments. The effectiveness of the public employment service should be improved.

©OECD Observer 2010

Economic data

GDP growth: -1.8% Q1 2020/Q4 2019
Consumer price inflation: 0.9% Apr 2020 annual
Trade (G20): -4.3% exp, -3.9% imp, Q1 2020/Q4 2019
Unemployment: 8.4% Apr 2020
Last update: 9 July 2020

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