Economy of Spain

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Economy of Spain
Currency	1 Euro = 100 eurocent
Fiscal year	Calendar year
Trade organisations	EU, WTO and OECD
Statistics
GDP ranking	9th
GDP (at PPP)	$1081.332 billion (2006 est.)
GDP growth	3.4% (2005 est.)
GDP per capita (at PPP)	$26,009 (2006 est.)
GDP by sector	agriculture: 3.4% industry: 30.1% services: 66.5% (2003 est.)
Inflation	3.4% (2005 est.)
Pop below poverty line	NA%
Labour force	17.1 million (2001 est.)
Labour force by occupation	services 64%, manufacturing, mining, and construction 29%, agriculture 7% (2001est.)
Unemployment	7.6% Oct 2006
Main industries	tourism, textiles and apparel (including footwear), food and beverages, metals and metal manufactures, chemicals, shipbuilding, automobiles, machine tools.
Trading Partners
Exports	$159.4 bn f.o.b. (2003 est.) machinery, motor vehicles; foodstuffs, other consumer goods
Main partners	France 19%, Germany 11.4%, UK 9.6%, Portugal 9.5%, Italy 9.3%, U.S. 4.6% (2002)
Imports	$197.1 bn f.o.b. (2003 est.) machinery and equipment, fuels, chemicals, semifinished goods; foodstuffs, consumer goods (1997)
Main Partners	France 17%, Germany 16.5%, Italy 8.6%, UK 6.4%, Netherlands 4.8% (2002)
Public finances
Public debt	$970.7 billion (42.9% of GDP) (2005)
Revenues	$440.9 billion (2005)
Expenses	$448.4 billion (2005)
Fiscal Deficit
Economic aid	ODA, $1.33 billion (donor) (1999)
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Contents 1 Transition to a modern economy 2 Current issues 2.1 Forecasts 3 Statistics 4 References and notes 5 See also 6 External links

[edit] Transition to a modern economy

Despite currently being the 9th world economy^[1], Spain inherited a regulated economy from Francoism as this died out by 1975.

Francoism initiated in the '60s a set of deregulating moves away from its initial total control of the economy; these, along with large infrastructure projects, resulted in the paramount economic growth almost overnight which came to be known as the "Spanish Miracle".

However, by Franco's death and the dawn of the present day constitutional monarchy, interventionism was still widespread: basic products like bread and sugar had their prices fixed by the government, large public firms controlled all sectors regarded as strategic (Telephone, tobacco, petrol, etc.), shops had fixed opening and closing times, both passive and active interest rates were fixed by the government, etc. All these rigidities and more were made obvious by the 1973 oil crisis, which terminated the previous expansion cycle and unleashed a roughly 10 years period of severe industrial crisis (1975-1985), growing unemployment and reducing convergence with Europe. This blow stressed the need to modernize the economy and doing so by trying to join the European Community.

Spain's accession to the European Community, now European Union (EU), in January 1986 forced the country to open its economy, modernize its industrial base and revise economic legislation to conform to EU guidelines. In doing so, and helped back with large amounts of funds received from the European Regional Development Fund, Spain greatly improved infraestructures, increased GDP growth, reduced the public debt to GDP ratio, reduced unemployment from 23% to 10%, and reduced inflation to under 3%.

[edit] Current issues

Following peak growth years in the late 1980s, the Spanish economy entered into recession in mid-1992. The economy recovered during the first Aznar administration (1996-2000), driven by a return of consumer confidence and increased private consumption. Unemployment is at 8.7% (December 2005), which represents a significant improvement from the 80's levels and a better rate than the one of Germany or France. Devaluations of the peseta during the 1990s made Spanish exports more competitive, but the strength of the euro since its adoption has raised recent concerns that Spanish exports are being priced out of the range of foreign buyers. However, this has been offset by the facilitation of trade among the euro nations.

The Spanish economy is credited for having avoided the virtual zero growth rate of some of its largest partners in the EU (namely France and Germany) by the late 90's and beginning of the 21st century in a process which started with former Prime Minister Aznar's liberalization and deregulation reforms aiming to reduce the State's role in the market place. In 1997 Spain started an economic cycle -which keeps going as of 2006- marked by an outstanding economic growth, with figures around 3%, often well over this rate^[2].

This has narrowed steadily the economic gap between Spain and its leading partners in the EU over this period. Hence, the Spanish economy has been regarded lately as one of the most dynamic within the EU, even able to replace the leading role of much larger economies like the aforementioned, thus subsequently attracting significant amounts of foreign investment.^[3]

Fundamental problems of the Spanish economy at the end of 2006 are, according to Financial Times^[4], its trade deficit (the "second biggest in the world and the world's largest in relative terms"), the "dramatic loss of competitiveness against its main trading partners" (also, as a part of the latter, an inflation rate which is traditionally higher than the one of its European partners, with house price increases of 150% from 1998) and the growing family indebtedness (115%).

[edit] Forecasts

Some experts believe that the current situation (end 2006) could turn into a serious problem if interest rates keep growing and the present overall good economic situation deccelerated abruptly.

[edit] Statistics

GDP: purchasing power parity - $1081.332 billion (2006 est.)

GDP - real growth rate: 3.4% (2005 est.)

GDP - per capita: purchasing power parity - $26,009 (2006 est.)

GDP - composition by sector:
agriculture: 3.4%
industry: 30.1%
services: 66.5% (2003 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: 2.8%
highest 10%: 25.2% (1990)

Inflation rate (consumer prices): 2.6% (2003 est.)

Labor force: 17.1 million (2001 est.)

Labor force - by occupation: services 64%, manufacturing, mining, and construction 29%, agriculture 7% (2001est.)

Unemployment rate: 7.6% october 2006

Budget:
revenues: $105 billion
expenditures: $109 billion, including capital expenditures of $12.8 billion (2000 est.)

Industries: textiles and apparel (including footwear), food and beverages, metals and metal manufactures, chemicals, shipbuilding, automobiles, machine tools, tourism.

Industrial production growth rate: 0.6% (2003 est.)

Electricity - production: 222,500 GWh (2001)

Electricity - production by source:
fossil fuel: 50.4%
hydro: 18.2%
nuclear: 27.2%
other: 4.1% (2001)

Electricity - consumption: 210,400 GWh (2001)

Electricity - exports: 4,138 GWh (2001)

Electricity - imports: 7,588 GWh (2001)

Agriculture - products: grain, vegetables, olives, wine grapes, sugar beets, citrus; beef, pork, poultry, dairy products; fish

Exports: $159.4 billion f.o.b. (2003 est.)

Exports - commodities: machinery, motor vehicles; foodstuffs, other consumer goods

Exports - partners: France 19%, Germany 11.4%, UK 9.6%, Portugal 9.5%, Italy 9.3%, U.S. 4.6% (2002)

Imports: $197.1 billion f.o.b. (2003 est.)

Imports - commodities: machinery and equipment, fuels, chemicals, semifinished goods; foodstuffs, consumer goods (1997)

Imports - partners: France 17%, Germany 16.5%, Italy 8.6%, UK 6.4%, Netherlands 4.8% (2002)

Debt - external: $90 billion (1993 est.)

Economic aid - donor: ODA, $1.33 billion (1999)

Currency: 1 euro (€) = 100 cents (before 2002, 1 peseta (Pta) = 100 céntimos)

Exchange rates: euros per US dollar - 0.83 (2006), 0.82 (2005), 0.81 (2004), 0.89 (2003), 1.06 (2002), 1.12 (2001), 1.09 (2000), 0.94 (1999)

Fiscal year: calendar year

[edit] References and notes

1. ^ World Bank GDP figures
2. ^ OECD figures
3. ^ Official report on Spanish recent Macroeconomics, including tables and graphics
4. ^ EUROPE: Boomtime Spain waits for the bubble to burst By: By Leslie Crawford in Madrid, Financial Times, Published: Jun 08, 2006

[edit] See also

• Economic history of Spain
• Economy of Europe
• Spain
• List of Spanish companies

[edit] External links

• Banco de España (Spanish Central Bank)
• Statistical Institute of Andalusia
• National Institute of Statistics
• Statistical Institute of Catalonia
• Statistical Institute of Galicia
• OECD's Spain country Web site and OECD Economic Survey of Spain
• Article: Investing in Spain by Nicholas Vardy - September, 2006. A global investor's discussion of Spain's economic boom.