Spain – Still on the road to recovery.
Spain has low productivity growth, hampering its ability to generate sustainable and inclusive growth, in fact it appears to be losing momentum as the Economic Sentiment Indicator has seen the highest falls of the big 5 economies, dropping 6.2 points since the end of 2015. Private consumption remains the main growth driver although it is forecast to fall this year as is investment in construction due to a tail off in non-residential construction, although residential construction remains strong which is partly supporting the recovery in the construction industry forecast for 2017.
The economy is also hampered by the fact that despite two general elections in the last seven months it still does not have any agreement to form a government which limits its ability to take radical action in securing new investment from abroad. The economy also remains hampered by its high public debt and negative inflation. In the last 12 months, employment has increased by almost 0.5 million with unemployment forecast to drop below 20 % by early 2017. Youth unemployment remains high but now stands at 43.9 % well below the 55.9 % high of February 2013.
One of the bright stars of the Spanish economy is vehicle production which has increased by 12.2 % in the first 6 months of this year and which sees 82 % of production exported to other countries. The
Economic Forecasts- Spain |
2014 |
2015 |
2016 |
2017 |
GDP growth(%, yoy) |
1.4 |
3.2 |
2.6 |
2.5 |
Inflation(%, yoy) |
( 0.2) |
( 0.6) |
( 0.1) |
1.4 |
Unemployment(%) |
24.5 |
22.1 |
20.0 |
18.1 |
Public budget balance(% of GDP) |
( 5.9) |
( 5.1) |
( 3.9) |
( 3.1) |
Gross public debt(% of GDP) |
99.3 |
99.2 |
100.3 |
99.6 |
Current account balance(% of GDP) |
1.0 |
1.4 |
1.5 |
1.3 |
RV Index: 36 months / 90,000 kms |
120 |
Average |
Spain |
115 |
110 |
105 |
100 |
95 |
90 |
2010 01 2010 04 2010 07 2010 10 2011 01 2011 04 2011 07 2011 10 2012 01 2012 04 2012 07 2012 10 2013 01 2013 04 2013 07 2013 10 2014 01 2014 04 2014 07 2014 10 2015 01 2015 04 2015 07 2015 10 2016 01 2016 04
Sources: European Commission – Economic Forecasts Experteye AG- RV Index Bowkett Auto Consulting Ltd- Forecast vehicle sales
European Automotive Report- 2016 Quarter 2 23