10 │ KEY POLICY INSIGHTS
The Spanish economy continues its strong and balanced growth (Figure 1). Strong employment gains have reduced unemployment and provided support to households. A wide range of structural reforms (discussed in detail in the 2017 Economic Survey of Spain) has contributed to the recovery. The correction of imbalances continues steadily, with a higher share of trade in gross value added, lower private debt and a healthier financial system. Maintaining momentum for structural reforms, notably in labour and product markets, is key to improve the resilience of the Spanish economy to future shocks. Figure 1. The economy and employment have grown steadily A. GDP growth Percentage
B. Employment rates Percentage
6
8 Spain
Euro area
Spain
6
4
Euro area
4 2
2
0
0 -2
-2
-4 -4
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
-8
2005
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
-6
-6
Source: OECD Economic Outlook (database), November 2018. StatLink 2 https://doi.org/10.1787/888933871654
However, the legacy of the crisis has not yet been fully overcome and imbalances remain. Despite large falls, the unemployment rate is still the second highest in the OECD (Figure 2, Panel A), which exacerbates inequalities and raises poverty. The labour market also remains highly segmented, with high rates of youth and long-term unemployment, and temporary contracts. After peaking at 100.4% of GDP in 2014, public debt has barely declined (Figure 2, Panel B). Population ageing implies a significant increase in age-related spending, potentially undermining fiscal sustainability. Current account surpluses in recent years have contributed to the reduction in Spain's external liabilities, but the negative net international investment position, at 80.9% of GDP in 2017, is still large in international perspective (Figure 2, Panel C).
OECD ECONOMIC SURVEYS: SPAIN 2018 Š OECD 2018