Spain

The economic recovery remains strong and balanced. Thanks to past reforms, the economy has become more competitive, flexible and resilient. A dynamic services sector has replaced the outsized construction sector as the engine of growth, the private debt burden is more manageable, and the banking sector is stronger. But challenges remain: public debt and structural unemployment are high, population aging is creating fiscal pressures, and productivity lags that of EU peers. In addition, Spain’s net debtor position with the rest of world is still large, and financial sector adjustments and institutional reforms are yet to be fully completed.