EU Sees Challenges To Spain's Economic And Employment Growth

(RTTNews) - Important challenges to Spain's sustained economic and employment growth, public finances and the banking sector still remain, the European Commission and the European Central bank said Friday after the conclusion of the first post-programme surveillance mission to Spain.

The recovery in output is continuing as exports remain robust and domestic demand stops being a drag on growth amid rising confidence. Unemployment is on a gradual declining path, but still at a very high level.

However, the EU said large debt levels and related deleveraging needs in the private and public sectors put a lid on medium-term growth prospects and keep the economy vulnerable.

The commission observed improvement in banks' liquidity situation and financing structure since the beginning of the year. The main challenge for banks appears to be the pressure on their profits from falling volumes of intermediation and still deteriorating asset quality.