1  Nonetheless, the buoyancy of activity has not yet been accompanied by a sustained increase in the inflation rate. Once the more volatile components such as energy and fresh food prices are stripped out, core inflation remains, as it has done for several years now, at low levels of around 1%. Many factors are behind this behaviour of prices, some of which are external in nature, such as globalisation, changes in oil and commodities prices, and technological progress, which have exerted very durable effects on prices. But to date, moreover, there has been very contained wage growth in the euro area as a whole, which is in contrast to the clear improvement in employment. Low productivity, the weight of past inflation on wage-setting processes and the presence – still – of some slack in the area’s labour markets, as reflected by high long-term unemployment and the presence of a notable volume of involuntary part-time employment, hamper, in my opinion, higher growth in wage income. The recovery of the Spanish economy I shall now move on to the essential features of the Spanish economy’s recovery and to the outlook for the continuation of the upturn. The current recovery is proving most intense. GDP grew in 2017 by 3.1%, the third consecutive year of growth above 3%. The strength of growth, which has throughout the expansionary phase outpaced that observed in the euro area as a whole, enabled Spanish GDP to resume its pre-crisis level by mid-2017.
The euro area-wide unemployment rate has fallen to 8.7%, compared with levels close to 13% at the height of the crisis, although there are substantial cross-country differences, ranging from an unemployment rate below 4% in Germany to 20% in Greece and 16.5% in Spain. Moreover, a balanced pattern of economic growth can be seen. Adding more recently to the momentum of private consumption, the sole engine of growth of the start of the recovery, has been the dynamism of business investment. Low financing costs, the sound performance of final demand and high capacity utilisation are enabling investment to pick up to pre-crisis levels. However, factors persist that might restrict medium-term investment projects, including most notably low potential growth expectations, the adjustment of balance sheets and the correction of high corporate debt levels still under way, and the problems that are creating political uncertainty. Euro area exports, boosted by more buoyant global trade, are also contributing to the momentum of activity. And this despite the notable appreciation of the euro since last spring. Undoubtedly, a significant factor underpinning the recovery has been the maintenance of an expansionary monetary policy, which has allowed financing conditions to be relaxed, contributing to the upholding of both private consumption and the recovery in investment. Specifically, estimates by the Banco de España suggest that the series of monetary policy measures adopted since mid-2014 might account for close to half of the nominal GDP growth in the euro area from 2015 to 2017.