Some good news for a change for Spain as the OECD think tank declared that the country appears to be on the path to recovery.
The organisation said Spain’s economy has had a “major turnaround” thanks to “courageous reforms” in the banking sector instituted over the last two years and to public sector spending cuts.
It urged the government to continue with its labour reforms and fiscal consolidation, while warning of the risk of deflation.
The recession was the deepest since the mid-70s but the OECD is now predicting moderate growth in 2014 and 2015.
The lower cost of labour has made Spanish exports more competitive. Government borrowing costs have also dropped.
But the plague of unemployment continues. Half the nation’s young people have no jobs and a quarter of the adult working population is also struggling without work. The 24.5% rate is the second highest in the eurozone.
“The economy is growing again, employment is rising, the banking sector has stabilised and financial markets’ trust in Spain has increased. It is now crucial to build on these accomplishments, with new efforts to enhance growth, boost productivity, further improve competitiveness and get people back to work," said OECD Secretary-General Angel Gurría.
It remains to be seen if Spain’s new-found competitiveness will be dented by the standstill in the wider eurozone. No growth was recorded in the second quarter of 2014.
