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Spain’s Economic Problems and Challenges for the year 2017

Spain’s Economic Problems

There will be a lot of opportunities and challenges for the Spanish economy this year, it is expected that the country will grow at a good pace, with new jobs, and a minority government obliged to seek consensus, in a research conducted, it is said that there are 3 major factors that could contribute to Spain’s Economic Problems for this year.

The first major problem is the normalization of the labor market, although the country’s unemployment rates is well below 20%, and with the Spanish economy outperforming the rest of the Eurozone since 2015, the country could be taken by surprise with a sudden slump. The good labor market performance cannot cover up any hysteresis effect that is changing the labor market.

A long term unemployment problem is surfacing, which would mean that the employability is decreasing, and that much higher growth rates in the future may be needed to keep unemployment on a decreasing trend.

The second for Spain’s economic Problems is the fiscal stance, and it is of course related to the debate in Europe. The Spanish Government has strongly reduced its net lending that nevertheless remains at around 5% of GDP. Spanish situation clearly needs a more expansionary environment that could only come from the rest of the Eurozone.

In an interview with the Chairman of the Consejo General de Economistas, Valentin Pich, Spain’s economic problem mainly is going to be complying with our deficit commitments with Europe. The deficit targets as a percentage of GDP are clear: as maximum of 4.6% in 2016, 3.1% in 2017 and 2.2% of GDP in 2018; another question is how to achieve them.

There are more challenges that Spain should look out for, especially with the effects of Brexit still lingering, Spain’s economic problems may pose imminent threats that may undermine its previous economic growth in the previous year.

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