Euro Challenge
Spain
Did you know…?
History During the 16th
century, Spain became the
most powerful nation in
Europe, due to the immense
wealth derived from its
presence in the Americas.
Food Tomatoes, potatoes,
avocadoes, tobacco, and
cacao were all imported into
Europe by Spain.
Art Many famous artists such
as Salvador Dali, Francisco
Goya, Diego Velazquez, and
Pablo Picasso are from Spain.
Literature “Don Quixote” is
the most influential work of
literature to emerge from the
Spanish Golden Age. It was
written by Miguel de
Cervantes Saavedra.
Culture The earliest recorded
Spanish bull-fight took place in
the year 1133 to celebrate the
crowning of King Alfonso VIII.
Fun Fact Every year the city
of Bunol, in the Valencia
region of Spain, hosts the
world's largest tomato fight,
“La Tomatina”.
2011
An overview of Spain’s economy
After the Spanish economic miracle ended with the burst of the housing
bubble in 2007/2008, Spain’s economy now faces severe challenges.
The Spanish success story the global financial crisis brought
ended suddenly. the Spanish economy into a
severe downturn.
Spain has been progressing
economically since the end of the Spain faces huge economic
Spanish Civil War in 1939 when its challenges.
economy was devastated. Spain
In a recent report, the IMF cau-
has seen the fastest economic
development in Western Europe tioned that the sustained increase
since the 1960’s which came to be in private sector indebtedness,
known as the "Spanish Miracle“. which is reflected in the widening
Today, tourism, industry and of the government deficit, and the
agriculture play a major role in the need to regain competitiveness
country’s economy. within EMU entail a possibly
prolonged period of slow growth.
Spain joined the European Union Worsening consumer confidence,
in 1986, along with Portugal. The higher oil and food prices, and
ascension of these two countries tighter credit conditions associated
brought the EU membership to 12. with the financial crisis, as well as
Spain was among the first the country's changing demogra-
countries to adopt the Euro in phic profile and a decline in EU
1999, and introduced Euro notes structural funds pose further
and coins in 2002. Although Spain challenges to the economy. In
was often described as a order to restore growth and reduce
European success story, the its very high rate of unemployment,
success proved to be unstable as Spain needs to undertake
much of its growth was driven by a ambitious labor market reforms
housing bubble. The real estate and competition-enhancing efforts.
bubble was caused by a
combination of low interest rates,
financial deregulation, rising
domestic incomes as well as
strong demand from foreign
investors, and overshadowed
Spain's falling competitiveness. In
addition, many of the new jobs
created were restricted to low-
wage, low-productivity parts of the
economy, such as construction
and domestic services, while other
more lucrative economic sectors
remained sluggish. Eventually, the
burst of the housing bubble and
‘
Euro Challenge 2011

Economy Spain's mixed

Spain’s Economy – Key Facts capitalist economy is the fifth
largest in the European Union.
• Spain is a decentralized country with 17 autonomous regions and
Its per capita income is slightly
two autonomous cities. Distinct traditional regional identities within
above the EU average.
Spain include the Basques, Catalans, Galicians and Castilians,
among others. Agriculture At more than 40%
of the world's production,
• The economy of Spain is the 5th largest in Europe. Until 2008 it had
Spain is the largest producer
been regarded as one of the most dynamic within the EU, attracting
of olive oil in the world.
significant amounts of foreign investment.
Competitiveness High private
• Trade plays an important role in the nation’s economy, accounting
debt and weak external
for more than half of its GDP. Major trade partners are Germany,
competitiveness cause long
France, Portugal and Italy.
adjustments. Spain cannot
• The World Economic Forum (WEF) Global Competitiveness Report devalue the currency to bolster
for 2009/2010 ranked Spain 33rd out of 133 countries in terms of competitiveness, so reforms
competitiveness. Spain’s competitiveness performance continues to that cut costs and improve
be boosted by the large market available to its national companies, productivity are key.
strong technological adoption and first-class infrastructure. On a
Unemployment The country’s
more negative note, there has been a measurable weakening of the
unemployment rate has sky-
country’s macroeconomic stability. The greatest area of concern
rocketed to over 20% by April
remains the highly inflexible labor market which commentators
2010, more than twice the
claim discourages job creation.
8.3% jobless rate clocked in
• The World Bank’s Doing Business Report ranked Spain 62nd out of 2007. Youth aged less than 25
183 counties. years saw unemployment
rates double to almost 38%.
• According to the European Commission’s Spring 2010 forecast, for
2010 as a whole, real GDP will contract by 0.4%, followed by a Housing Market In 2006
moderate positive growth of 0.8% in 2011. The government deficit Spain started nearly 800,000
is projected at 9.8% of GDP in 2010. This implies a reduction in the homes – more than Germany,
headline public deficit of around 1.4 percentage points, due to the France, Italy, and the UK
consolidation efforts undertaken by the authorities, including a combined. However, the 2007
partial reversal of the 2009 stimulus package. funding crunch brought the
boom to a halt, and
References adjustment will take time given
• http://delicious.com/eurochallenge/Spain a large inventory.
• http://europa.eu/abc/european_countries/eu_members/spain/ Inflation Spain’s core inflation
• www.oecd.org/spain rate has generally been above
the EU average. Now, it
• http://www.imf.org/external/country/ESP/ compares with a euro-region
• http://www.doingbusiness.org/ExploreEconomies/?economyid=173 average of 0.8% in April 2010.
• https://www.cia.gov/library/publications/the-world-
factbook/geos/sp.html