Spain: Competitiveness challenge

Output growth, which reached 3.7% in 2006, should moderate somewhat in 2007 and 2008 as monetary conditions tighten and exports are expected to weaken. It will remain robust, however, pushing the unemployment rate to below 8%. With inflation stabilising at around 3%, the differential with the euro area is unlikely to shrink significantly, implying a further erosion of international competitiveness.
A more restrictive fiscal policy would be useful not only in reducing domestic demand pressures that have fed into inflation, but also in preparing for the fiscal consequences of ageing. However, reducing the inflation differential will still require structural reforms that foster competition in sheltered sectors and limit the use of indexation clauses in wage agreements. Lowering the country’s energy intensity of production would reduce longer-term vulnerability to oil-price shocks.
Population (000s), 200543 398
Area (000 sq km)505
CurrencyEuro
GDP (Billion USD), 20051 182.6
Life expectancy at birth (Women, Men), 2004 83.8, 77.2
Total labour force (000s), 200520 886
Government typeParliamentary Monarchy
Indicators% change unless otherwise indicated
200620072008
GDP growth3.73.33.1
Household savings ratio10.010.110.0
Consumer price index3.52.73.2
Unemployment rate (%)8.47.87.6
General government financial balance
(% GDP)
1.41.21.4
Current account balance (% GDP)-8.8-9.2-9.6
©OECD Observer No. 258/259, December 2006


Economic data

GDP growth: +0.2% Q4 2019
Consumer price inflation: 1.7% March 2020
Trade (G20): -0.1% exp, -1.3% imp, Q4 2019
Unemployment: 5.6% March 2020
Sharp drop in OECD leading indicators point to darker outlook: Last update: 14 May 2020

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