Spain | Aging and convergence

Despite higher recent GDP growth, the productivity of the Spanish economy has been falling behind that of the EU, making convergence in per capita income difficult. The projections of the Ageing Report 2024 do not foresee any improvement in the outlook.

Key points

• Key points:
• This pattern of growth of the Spanish economy is more extensive (through increased employment and population) than intensive (growth in productivity and per capita income), with investment still below the pre-pandemic figure.
• As it happens, in the first quarter of 2024 GDP per employed person was 1.6 points below its level at the end of 2019, because the growth in productivity per hour fails to counter the decline in hours worked per employed person.
• The European Commission’s recently published 2024 Ageing Report projects a fairly sideways scenario until 2070, with no economic policy changes, based on the trends observed in recent decades.
• For Spain, the projected growth in GDP per employed person is 1.3%, 30% higher than that observed since 1980 and almost three times the level reported since 2000. Despite this improvement in productivity and the expected reduction in the unemployment rate to 6.2% in 2052, the projected average growth in per capita income is 1.2%, one-tenth of a percent below the EU figure.
• To catch up with the average per capita income in the EU, Spain must do a much better job than the rest of Europe in harnessing the opportunities presented by the dual digital and energy transition. To succeed, it is crucial to improve the quality of its public institutions and policies, so that they become more adept at promoting investment in productive, technological, and human capital, and productivity, in the context of an ageing population, which requires significant migratory flows and their economic and social integration.

Authors

Geographies

Topics

Tags