The Organization for Economic Cooperation and Development (OECD) is optimistic about the performance of the Spanish economy this year. They predict 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. They express concern about Spain’s high public debt and suggest measures like increasing Value Added Tax (VAT) and environmental taxes, as well as improving productivity through education and technology promotion.
In terms of labor market policies, the OECD suggests a renewal of active labor market policies to address skills mismatches. They propose implementing measures to mitigate fiscal costs in the short term by limiting the impact of social aid on vulnerable groups. For long-term fiscal pressure mitigation, they recommend expanding the VAT base and improving spending efficiency. The OECD forecasts a decrease in the public deficit and debt, although they are still above the targets set by the Spanish government for 2024 and 2025.
The OECD projects economic growth for Spain to be stronger than other eurozone countries, driven by private consumption and supported by a resilient labor market. 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 the importance of addressing regional disparities for overall economic stability.