IMF Executive Board has concluded 2015 Article IV Consultation with Spain. The Executive Directors have highlighted the importance of the ‘strong policy implementation’ and the ‘significant external tailwinds’ for the growth that the Spanish economy is experiencing in the last quarters. The IMF expects Spain to grow by 3.1% in 2015 and 2.5% in 2016, more than its European peers.
However, they recommended to keep wages in line with productivity and business conditions at the firm level, lowering labor market duality, which still rely heavily on temporary and part-time contracts, and strengthening the skills of the long-term unemployed.
Moreover, the directors welcomed initiatives to promote competition, especially in the services sector, support the internationalization of SMEs, and improve their access to finance.
They recommended more ambitious and well-specified budget measures too, while the Government should implement more measures in order to protect the most vulnerable.
IMF also pointed out that Spain’s public and private debt levels are still high and are likely to keep weighing on consumption and investment. Another external vulnerability is the large negative net international investment position of the country.
Therefore, IMF has also warned that a reversal of implemented reforms could create uncertainty and could hamper the recovery.