Economy of Spain

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Economy of Spain
Spanish One Euro coin
Currency	1 Euro = 100 eurocent
Fiscal year	Calendar year
Trade organizations	EU, WTO and OECD
Statistics
GDP ranking	8th
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	N/A
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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[edit] Transition to a modern economy

What is now the 8th largest economy^[1] in the world inherited a regulated economy from Francoism as this started to fade out in 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 (although this too existed, in other European countries, eg. Germany), 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). This blow stressed the need to modernize the economy and join the European Community.

Spain's accession to the European Community, now European Union (EU), in January 1986 ushered the country into opening its economy, modernize its industrial base and revise economic legislation. In doing this effort -supported from the EU with large amounts of funds 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] The 1990s and current issues

Following peak growth years in the late 1980s, in 1992 the Spanish economy was finally touched by the late 1980s recession; that happened, tellingly, on the year when the Barcelona Olympics were held and all the construction investment and feasts were finished. The economy, however, 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.

In 1999 Spain was amongst the leading group within the EU to adopt the Euro as their accounting money in preparation for its lauching as a physical currency, which happened in January 1, 2002. On that date Spain terminated its historic peseta currency and replaced it with the euro, which has become its national currency shared with 13 other countries from the Eurozone. This culminated a fast process of economic modernization even though the strength of the euro since its adoption has raised recent concerns that Spanish exports outside the European Union 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 impressive 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 ones of France and Germany, thus subsequently attracting significant amounts of foreign investment.^[3]

Due to its own economic development and the recent EU enlargements up to 27 members (2007), Spain as a whole finally slightly exceeded (100.7%) the average of the EU GDP in 2004. As for the extremes within Spain, three regions were included in the leading EU group exceeding 125% of the GDP average level (Madrid, Navarre and the Basque Autonomous Community) and one was below the 75% level (Extremadura).^[4] According to the growth rates after 2004 to date, noticeable progress from these figures is still going on as of 2007.

Fundamental problems of the Spanish economy by early 2007 are, according to Financial Times^[5], its grave unsustainable 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" and also, as a part of the latter, an inflation rate which is traditionally higher than the one of its European partners, lately affected by house price increases of 150% from 1998 and a growing family indebtedness (115%) mostly based on this same real estate boom.

[edit] Environmental concerns

As with most of the fast developing countries, there is an environmental issue and a concern that Spain's model of economic growth (based largely on mass tourism, the construction industry, and manufacturing sectors) is faltering and may prove unsustainable over the long term. The first report of the Observatory on Sustainability (Observatorio de Sostenibilidad) — published in 2005 and funded by Spain's ministry of the environment and Alcalá University — reveals that the country's per capita GDP grew by 25% over the last ten years, while greenhouse gas emissions have risen by 45% since 1990. Although Spain's population grew by less than 5% between 1990 and 2000, urban areas expanded by no less than 25% over the same period. Meanwhile, Spain's energy consumption has doubled over the last 20 years and is currently rising by 6% per annum. This is particularly worrying for a country whose dependence on imported oil (meeting roughly 80% of Spain's energy needs) is one of the greatest in the EU. Large-scale housing and tourism development are placing severe strain on local land and water resources. Recent developments to deal with the country's growing water shortage include the building of heavy energy using reverse osmosis plants along the Spanish "costas".

[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 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. ^ Eurostat 2004 GDP figures
5. ^ EUROPE: Boomtime Spain waits for the bubble to burst By: By Leslie Crawford in Madrid, Financial Times, Published: Jun 08, 2006

[edit] See also

• Banco de España Spanish Central Bank
• Economic history of Spain
• Economy of Europe
• Spain
• List of Spanish companies

[edit] External links

• Banco de España (Spanish Central Bank); features the latest and in depth statistics
• 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.

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