The Spanish economy is set to show positive growth this year, according to a forecast by 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 lower inflation rates and a decrease in unemployment. However, despite these positive outlooks, the OECD has also provided recommendations to ensure sustained growth and compliance with new European fiscal rules.
To achieve these goals, the OECD recommends measures such as increasing Value Added Tax (VAT) and environmental taxes, improving productivity through education enhancements and technology promotion, and revitalizing labor market policies to improve job efficiency. Additionally, the organization emphasizes the importance of ensuring additional revenues for public coffers through expanding the VAT base and improving spending efficiency.
While private consumption is expected to drive strong growth in the short term, there are concerns about productivity challenges affecting GDP growth in the long term. To address these issues, the OECD suggests promoting innovation, improving education levels, and reforming labor markets to support sustainable growth.
On a global scale, the OECD predicts global GDP growth of 3.1% in 2024 and 3.2% in 2025, with declining inflation rates. While there are varying growth rates across regions, overall economic outlook is positive with risks becoming more balanced. The organization emphasizes prudent monetary policy and fiscal measures as necessary to address debt sustainability and regional disparities in growth rates.
In summary, while Spain’s economy is expected to show strong growth this year driven by private consumption but there are concerns about productivity challenges affecting long-term GDP growth. The OECD recommends several measures such as increasing VAT and environmental taxes to promote sustainable growth while addressing debt sustainability on a global scale through prudent monetary policy and fiscal measures.