Post-Programme Surveillance Report Spain, Spring 2017

Source: European Commission
Type of item: Recommendation / Analysis
Date: 7/7/2017

Spain's real GDP growth is expected to remain robust this year and the next. In 2016, economic activity expanded strongly, by 3.2%, the same rate as in the previous year and well above the euro area average. Domestic demand, and especially private consumption, remained the main driver of growth, but net exports also contributed. Growth was underpinned by favourable external and financing conditions and strong job creation, in turn supported by continued wage moderation and past reforms.

This document includes the following recommendations in the corresponding reform areas

4. FINANCIAL SYSTEM

4.1 Recapitalization and Restructuring

- Restructuring plans of state-aided banks is well advanced and should be completed by the end of the year. Bank reprivatisation is proceeding slowly.

 

4.2 Other financial measures

- SAREB faces serious challenges such as strengthen internal control systems and attract new talent as staff  to finalise the divestment of its portfolio in a profitable manner.

- SAREB needs to monitor very well its servicers and develop innovative selling channels that would allow it to mitigate the slower than expected recovery of real estate  prices 

5. FISCAL POLICY AND PUBLIC ADMINISTRATION

5.1   Fiscal consolidation and fiscal reform

The consolidation effort to ensure a durable reduction of the general government deficit and debt, in line with the fiscal adjustment path set by the Council, needs to continue.