The Spanish economy is expected to see significant growth this year, according to the Organization for Economic Cooperation and Development (OECD). The organization predicts an increase in Gross Domestic Product (GDP) by 1.8% in 2024, along with decreased inflation and a reduction in unemployment. However, the OECD also provides recommendations to ensure sustainable growth and compliance with new European fiscal rules.
The OECD is concerned about Spain’s high public debt and has suggested measures like increasing Value Added Tax (VAT) and environmental taxes, as well as improving productivity through education and technology promotion. They also recommend implementing active labor market policies to address skills mismatches and limiting the impact of social aid on vulnerable groups to mitigate short-term fiscal costs.
For long-term fiscal pressure mitigation, the OECD recommends expanding the VAT base and improving spending efficiency. Despite weak investment, the country is expected to benefit from the Recovery, Transformation, and Resilience Plan to boost growth. The OECD emphasizes the need to increase productivity through innovation, education, and labor market reforms to sustain growth in the long term.
In a global context, the OECD expects global GDP to rise gradually, with inflation declining over time. They stress the importance of prudent monetary policy and fiscal measures to ensure debt sustainability. While some advanced economies may experience weaker growth, the United States and emerging markets are expected to show strong growth. The OECD highlights the need for balanced economic growth and addressing regional disparities for overall economic stability.
Overall, while there are concerns about Spain’s high public debt levels, there is optimism about its economic performance this year due to increased GDP predictions by 1.8%. With continued efforts towards sustainable growth through innovation and labor market reforms, Spain can maintain its competitive edge in Europe’s eurozone region.
