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Economy

Remarkable progress

Spain has achieved much in the short time since its release from Franco’s grip. It has travelled the path from dictatorship and isolation to a successful democracy in 30 years and, on the whole, it has kept on growing. The result is that the average Spaniard is now 75% richer than he was 30 years ago and per capita income stands at around 80% of the EU average.

Economic growth

After a promising few years for Spain’s economy in the late 1980s, when it grew on average by 5% a year, Spain felt the effects of the recession that affected Europe during the early 1990s. However, its economy got back on track from 1994 with moderate growth.

Adopting the euro

Spain was in the first group of countries to adopt the euro in January 1999, thanks to efforts made by its government under President Aznar. The government has continued to implement a series of reforms, pushing forward privatisation, liberalisation and deregulation of the economy. Unemployment under Aznar’s government decreased, although the overall level remained high. Between 2003 and 2006, Spain’s economic growth was on average 3% per year which, given the state of Europe’s economy during these years, was considered satisfactory.

Service-led economy

The economy is now dominated by the services sector - comprising retail, tourism, banking and telecommunications - accounting for approximately 65% of GDP. Construction figures are very high for a European country, constituting nearly 10% of GDP, due to several factors including tourism, the development of the second-home market on the Spanish Costas, investment in infrastructure and attempts to combat a shortage of quality housing.

GDP growth

Current figures show that Spain’s GDP is growing at 3.9% (2006 estimate) but unemployment is relatively high at 8.1%. Unemployment is worse in the south as the traditional business centres are situated in northern provinces such as Bilbao in the Basque Country, Barcelona in Catalonia and the capital, Madrid. The southerly provinces of Andalucia and Extremadura have not seen much business development outside of the main cities such as Seville and Cordoba. However, the relatively recent property boom has attracted a lot of investment. In 2006, Spain received over €200 billion of foreign investment, up from just over €100 billion received during 2005.

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Documents and Reports

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