Spain’s economy has been emerging slowly from a recession, while the ECB’s quantitative easing and recent reform efforts improved market confidence. The EPI grades Spain’s current economic performance at a D+ level, with the EPI score projected to be 78.5% in 2016.

Spain’s recovery has gathered speed, but an unemployment rate of more than 20% remains the key issue, as it remains stubborn and has been declining only very gradually in the past few years. Job creation has picked up, but more than 5 million people remain unemployed and new jobs still rely heavily on temporary and part-time contracts. Growth has picked up and is expected to be at 2.5% in 2016, well above the euro area average. Strong policy implementation has supported the return of confidence, and the private sector has started borrowing again after long-lasting deleveraging.

However, deep structural problems limit Spain’s growth going forward, including the high structural unemployment and the lack of economies of scale. Public and private debt levels are still high and are likely to keep weighing on consumption and investment.

The 5-Minute Economist projects Spain’s EPI score to gradually recover to only 83%, or a C level, by 2020, as unemployment is likely to remain very high.