Spain’s mixed capitalist economy is the fourteenth-largest economy by nominal GDP (USD 1.4 trillion) in the world, and sixteenth largest by purchasing power parity.
It is the fifth-largest economy in the European Union, and the fourth largest in the Eurozone, based on nominal GDP statistics.
In 2015, Spain was the nineteenth-largest exporter in the world and the fifteenth-largest importer. Germany, France, Italy, UK and China are main trading partners.
Spain is one of the fastest growing economies in developed world. In 2015, while the United States GDP grew 2.5% and European Union economy advanced just 1.5%, Spain registered a 3.2% growth. This GDP growth does has not resulted in Balance of Payments current account deficits as in previous growth cycles.
Spain’s growth prospects are stable. The Spanish economy is evidencing a more favourable pattern of behaviour compared with the rest of the largest developed countries. In fact, GDP growth is expected to outperform the larger developed countries and the Euro area average over the next years, according to the IMF.
This growth is supported by the progressive increase in internal demand, primarily led by private investment and domestic consumption. In fact, the private components of domestic spending have played a key role in the growth of the Spanish economy in recent quarters, and have made a decisive contribution to improving investors & expectations. Specifically, the expansive behavior of household spending on consumption in the most recent period has continued to be sustained on the upward trend in financial factors and employment. In fact, GDP and employment are growing at the same pace. Spain has generated 42.8% of all the employment created in the Euro Area since 2014.
The positive effects of structural reforms account for a large part of this trend. Spain undertook an ambitious programme of structural reforms which is having a significant impact on the Spanish economy, driving an increasing improvement in competitiveness at company level and on the whole of the country’s economy. These reforms have increased competition, brought greater flexibility to the labour market, restructured the financial system, and improved the conditions under which new companies can access the market.
The Spanish economy registered quarterly growth of 0.8% in the fourth quarter of 2015. The growth is projected to remain robust in 2016 and 2017, backed by positive labour market developments, improved access to credit for firms and households, high confidence and low oil prices. Spain’s economy has expanded by 3.2% in 2015 and is forecasted to grow 2.7% and 2.4% in 2016 and 2017, respectively.
According to hard and soft data on economic activity, private consumption growth remained robust in the last quarter of 2015 and it is expected to remain the main driver of growth in 2016 and 2017, supported by low inflation and steadily improving labour market conditions. Exports will remain resilient, with exports of goods progressively gathering steam, fueled by continued improvements in competitiveness and recovering growth in Spain’s main export markets.
In 2015, inflation averaged -0.6%, driven by the fall in oil prices. It is expected to turn slightly positive again in the short term, but to remain low over 2016 and 2017, due to low external price pressures and remaining slack in the economy.
Job creation remained very robust in the second half of 2015, while the labour force registered an expansion. There are 958,800 more employees than in end-2013. The unemployment rate fell to 20.9% in the fourth quarter of 2015, with a further expected decrease in the next quarters.