Ángel Laborda and María Jesús Fernández. April 2015. SEFO, 5
Tuesday 15 November 2016, by Ángel Laborda and María Jesús Fernández
Correction of imbalances, together with structural reform and exogenous factors, supports an optimistic outlook for Spain´s recovery in 2015 and 2016. Deterioration of the balance of payments, however, reflects the need for further reform in order to achieve strong, sustainable growth in the longer-term.
The Spanish economy’s recovery has gained strength as a result of progress on the correction of imbalances built up during the growth phase. Other supportive elements include the effects of labour-market reform and a number of exogenous factors, such as falling oil prices and interest rates, cuts in personal income tax, and increased public spending ahead of various elections this year. These factors are stimulating consumption and residential and non-residential construction to a greater extent than anticipated, leading to the GDP growth forecast for 2015 being raised to 3%. Nevertheless, the effect of these factors will be short-lived, and their impact will start to wear off in 2016, such that the forecast for next year is for a slowdown to 2.8%. The downside to this recovery is the deterioration of the balance of payments, which has only avoided entering negative territory this year and next as a result of the drop in the oil price.
1. International context
2. Recent developments in the Spanish economy
3. Forecasts for 2015-2016