OECD Forecasts Optimism for Spanish Economy in 2024, Recommends Sustainable Growth and Compliance with New European Fiscal Rules

The Organization for Economic Cooperation and Development (OECD) has expressed optimism about the performance of the Spanish economy in 2024. They predict a 1.8% increase in Gross Domestic Product (GDP), as well as decreased inflation and reduced unemployment. However, the OECD also recommends sustainable growth and compliance with new European fiscal rules to ensure long-term stability.

One of their main concerns is Spain’s high public debt, which they suggest addressing through measures like increasing Value Added Tax (VAT) and environmental taxes, as well as improving productivity through education and technology promotion. In terms of labor market policies, the OECD recommends a renewal of active labor market policies to address skills mismatches and implementing measures to mitigate fiscal costs in the short term by limiting the impact of social aid on vulnerable groups. For long-term fiscal pressure mitigation, they suggest expanding the VAT base and improving spending efficiency.

The OECD forecasts a decrease in the public deficit and debt, although they are still above the targets set by the Spanish government for 2024 and 2025. They project economic growth for Spain to be stronger than other eurozone countries, driven by private consumption and supported by a resilient labor market, despite weak investment. The country is expected to benefit from the Recovery, Transformation, and Resilience Plan to boost growth.

In a global context, the OECD expects global GDP to rise gradually, with inflation declining over time. They emphasize the importance of prudent monetary policy and fiscal measures to ensure debt sustainability while highlighting regional disparities that could affect overall economic stability. While some advanced economies may experience weaker growth, emerging markets are expected to show strong growth.