MADRID – The prospect of a quick recovery in Spain remains remote and decisive policy action is needed if the economic and financial situation is to be turned around, the Organisation for Economic Co-operation and Development (OECD) said on Thursday.
In a report on Spain, the OECD also said the government should aim to meet its 2012 headline deficit target of 6.3 percent of Gross Domestic Product unless economic growth is far lower than expected.
"The prospect of an immediate recovery remains remote as deleveraging of the private sector still has a long way to go while the feedback loop between government finances and the banking sector remains strong," the group said in the report.
It added that spending cuts and tax measures to reach the 2014 deficit targets and permanent budgetary steps should be spelled out.
The country needs to implement further structural reforms to boost employment, especially among youth, and further pension reform would improve the long-term sustainability of the system, it also said.
(Reporting by Julien Toyer; Editing by Fiona Ortiz)