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Spanish Economy - After the Fiesta
21st February 2009
The Spanish economy is in trouble after out-performing the rest of the Euro Zone for the last decade. Download this special feature on the Spanish Economy…
Spain is one of the top ten economies in the world and the 4th largest economy within the 16-member Euro Area. Spain has enjoyed strong economic growth over the last decade but this has now come shuddering to a halt. The economy became over-dependent on construction/property - with construction alone accounting for over 7% of total GDP. Construction is now deep in recession and the negative housing multiplier effects - on producers of construction materials, estate agents, household appliances) are proving to be large. Tourism is also suffering from the strong Euro (fewer UK tourists and some ex-pats leaving for home) and the farming industry (e.g. citrus production faces stiff competition from North Africa). The government fiscal deficit is already over 3% of GDP and the country’s AAA rating on government debt has been downgraded making it harder and more expensive for the state to finance a fiscal recovery programme.
Key points from the resource (see links below)
- Spain likely to see a 3.5% decline in GDP in 2009 – the first recession since 1993
- The return of mass unemployment after 10 years of labour market successes
- Real danger of price deflation
- Fiscal deficit will balloon to more than 6% of GDP
- Economy became over-dependent on a booming property sector which has now gone into reverse – over 1m empty new homes
- Very high level of private sector debt (similar to Ireland)
- Spanish manufacturing businesses seem to be affected more by the credit crunch than elsewhere in the Euro Zone
The following material will help your students conduct their rapid revision on the European and Spanish Economy - useful for students preparing for the AQA Unit 4 paper in June.
Access interactive version of presentation
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.