European Commission staff, in liaison with staff from the European Central Bank, visited Madrid from 4 to 5 October for the tenth post-programme mission to Spain. Staff from the European Stability Mechanism participated in the meetings in the context of its Early Warning System. The Spanish banking sector continues to enjoy overall comfortable solvency and liquidity. Its profitability has also improved thanks to the decline of loan-loss provisions as the non-performing loans ratio has declined to just above the EU average. Spanish economic growth, underpinned by strong domestic demand, continues to outperform the euro area average and macroeconomic rebalancing has progressed. A weaker performance of the external sector in the first half of this year has driven a mild slowdown in the growth momentum, in line with expectations. Still high external and domestic debt levels and unemployment warrant policy efforts to ensure a more durable growth path and achieve higher productivity growth, in line with the country-specific recommendations issued by the Council of the European Union on 13 July.