The sun rises every morning, which is no mean feat

Country Rating A1


  • Good performance and competitiveness in some specific sectors
  • Presence of large international companies
  • Bridge between the world and Latin America
  • Large economy
  • Infrastructure network


  • High fiscal deficit and public debt
  • High private debt
  • Weak legal system
  • Disastrous labor market
  • Poor education and training
  • Faulty territorial organization
  • Polarized politics, lack of accountability and corruption


Economic Overview

Pot luck

Real GDP grew by +0.7% q/q and +3% y/y in Q4 2016. Production echoed 2015 although it was below the average +3.9% recorded in the decade preceding the global financial crisis. Private consumption and exports are once more considered the engines of growth, despite a moderate deceleration. Public consumption, investment, and imports are expected to change on a similar scale as in 2016. 

Rebalancing has led to a much healthier composition of GDP. The share of construction increased from 16% to 22% between 1998 and 2007, before the housing bubble burst in 2008, resulting in construction to shrink by -38% until 2013. Collaterally, the aftermath of the housing bubble shrank tax collection by -EUR70.7bn between 2007 and 2009 and revenues are still -EUR28.7bn below the 2007 peak. Meanwhile, the share of exports in GDP increased from 23% to 32% between 2010 and 2016. Combined with the decline in imports, this has enabled Spain to benefit from a surplus in the trade balance.

Fight with cudgels

Mariano Rajoy was sworn in as Prime Minister for a second term after winning a parliamentary confidence vote. This allowed him to lead a minority government after ten months of political impasse. The new cabinet will need to build consensus across a hostile and polarized parliament to push through reforms.

Spain appears to be on track for meeting its -4.6% fiscal deficit target for 2016, down from -5.1% in 2015. The trend is largely supported by a better than expected output performance. The government submitted to Brussels an amendment on its 2017 budget to meet the -3.1% fiscal deficit target for the year, which currently falls short by +EUR7.5bn. The estimated increases of tax collection include +EUR4.65bn by limiting corporate tax deductions, +EUR850mn by raising special taxes, +EUR1.5bn by improving tax effectiveness, and +EUR500mn from fighting fraud. However, the Social Security fund is expected to run a -EUR2.6bn deficit in 2017 after having exhausted a +EUR66.8bn reserve fund within seven years.  In addition, 0.9pp should be raised in 2018 to meet the -2.2% fiscal deficit target for 2017.

Mondays in the sun

The condition of the Spanish labor market is a long-standing issue. High-skilled employment is scarce and the labor force lagged behind regarding human capital. The unemployment rate fell below 20% for the first time in six years, although it still remains the second-highest among EU members. The 30-year average exceeds 17% and the employment rate is over 15 percentage points below European top performers. 

Spain shows a marked duality in terms of protection and wages. The country also comes second in terms of the incidence of temporary contracts, which accounts for about one-fifth of employees, twice higher than the regional average. In addition, the share of involuntary part-timers (out of overall part-time employment) climbed to more than 60% in recent years.

Last review: 2017-21-09




    (World ranking 14, World Bank 2015)


    46.418 million
    (World ranking 29, World Bank 2018)

    Form of state

    Parliamentary monarchy

    Head of government

    Mariano Rajoy Brey (centre-right), since 2011

    Next elections

    General elections 2020 (4-year term)

    Last reviewed: 22/03/17

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