Spain facts: Spanish economy
Facts on the economy in Spain, and the status of the Spanish economy.
Spain's mixed capitalist economy is the 13th largest in the world and its per capita income roughly matches that of Germany and France. However, after almost 15 years of above average GDP growth, the Spanish economy began to slow in late 2007 and entered into a recession in the second quarter of 2008. GDP contracted by 3.7 percent in 2009, ending a 16-year growth trend and by another 0.1 percent in 2010 before turning positive in 2011, making Spain the last major economy to emerge from the global recession.
The reversal in Spain's economic growth reflected a significant decline in construction amid an over-supply of housing and falling consumer spending, while exports actually began to grow. Government efforts to boost the economy through stimulus spending, extended unemployment benefits and loan guarantees did not prevent a sharp rise in the unemployment rate which rose from a low of about 8 percent in 2007 to 20 percent in 2010. The government budget deficit worsened from 3.8 percent of GDP in 2008 to 9.2 percent of GDP in 2010, more than three times the euro-zone limit. By severely restricting spending, Madrid cut the deficit to 6.5 percent of GDP in 2011.
Spain's large budget deficit and poor economic growth prospects have made it vulnerable to financial contagion from other highly-indebted euro-zone members despite the government's efforts to cut spending, privatise industries, and boost competitiveness through labour market reforms. Spanish banks' high exposure to the collapsed domestic construction and real estate market also poses a continued risk for the sector.
The government oversaw a restructuring of the savings bank sector in 2010 and provided some EUR 11 billion in capital to various institutions. Investors remain concerned that Madrid may need to bail out more troubled banks. The Bank of Spain, however, is seeking to boost confidence in the financial sector by pressuring banks to come clean about their losses and consolidate into stronger groups.
Labour force: 23.13 million
Country comparison to the world: 28
Unemployment rate: 20.8 percent
Country comparison to the world: 163
CIA World Factbook / Expatica
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