The macroeconomic data for 2015 confirms that the recovery of the Spanish economy is now gaining a strong foothold. With GDP growth of 3.2% in 2015 (twice the eurozone average), Spain is the fastest-growing of Europe’s advanced economies according to Oxford Economics, which forecasts 2.8% GDP growth for the country in 2016. Domestic demand is the main driver behind this growth.
This rate of economic expansion will give rise to the net creation of one million jobs by the end of 2016, with unemployment at around 20% by year end. Over half a million jobs were created in 2015, the best figure since 2006, making Spain the eurozone’s most active country in terms of job creation.
Spain has also registered the largest increase in productivity since the end of the crisis of all the major European economies. According to Eurostat, since 2010, productivity per hour worked has risen by 7% in Spain, versus a 3% eurozone average.
Inflation stood at -0.5% in 2015 due to falling oil prices, but core inflation held steady, which is a sign of recovering growth.
Spain has seen the largest reduction in private sector debt in Europe over the course of the crisis, largely due to the severe credit crunch that began in 2010. At the end of 2015, household debt had fallen by 16% of GDP since 2007, equivalent to some 165 billion euros, returning to pre-crisis levels. Debt held by non- financial sector companies has fallen by over 300 billion euros since the beginning of the crisis. The total drop in private sector debt (households and businesses) during the crisis stands at 45% of GDP.
Though the total volume of private sector debt is falling, households and businesses alike are taking advantage of increased market liquidity and securing new financing.
The tourism sector continues to thrive. Spain ranks third on the list of global destinations with more than 68 million tourists in 2015 (up almost 5% on 2014). Spending by international tourists stood at 4 billion euros up to November 2015, an increase of 6.4% year on year.
Economic fundamentals are positive, which is underpinning the recovery of the residential sector. Housing investment (in terms of gross capital formation) grew for the first time in 2015 after seven years in decline, representing a turning point in the trend. Residential property investment grew 2.5% in 2015 and currently represents 5% of GDP, in line with the European average, compared with the 12% of GDP it accounted for in 2006-2007. The segment contributed two-tenths of a percentage point to the 3.2% growth in Spain’s GDP for the year.