Spain

Capital: Madrid

Local time:
It is %T:%M %A in Madrid

GDP growth rate: 1.8% in 2013

FDI stock: 614 473 million USD in 2010

Economic trends

Although Spain has achieved an economic leap in the last two decades and has risen to be amongst 20 of the world's most significant economies, its recovery has been difficult. The growth factors, which were at the root of its economic growth have been weakened by the 2009 financial crisis, which affected strongly the real-estate sector and weakened the banking system. in 2011, the expected recovery did not manifest - to the contrary, growth slowed down and it seems that in 2012 the economy will fall back into recession.

The government inherited a very difficult situation: public debt increased, the sovereign debt rating of Spain was lowered, and despite the previously implemented measures, markets have remained wary because of the risk represened by the ongoing debt crisis in the eurozone.

The government has decided to act decisively and announced a very strict austerity plan:  budget cuts (especially in the health education sector), a hiring freeze in public service jobs, a plan for support the banking system through mergers, support for businesses, and higher taxes.

Already holding the European record in 2009, Spanish unemployment rate continued to increase in 2011, reaching record highs: more than one fifth of the workforce is unemployed, including almost half of those under 25 years of age. As a consequence of the present crisis and uncertainty, the Spanish migration balance has again become negative.

Main branches of industry

Agriculture contributes around 3% of the Spanish GDP. The country produces wheat, sugar beet, barley, tomatoes, olives, citrus fruits, grapes and cork. It is the world's largest producer of olive oil and the world's third largest producer of wine. It is the largest producer of lemons, oranges and strawberries. Spain has limited mineral resources.

The manufacturing industry is dominated by textiles, industrial food processing, iron and steel, naval machines and engineering. The new sectors such as relocation of the production of electronic components, information technology and telecommunications provide a high growth potential.

Tourism represents Spain's largest source of income and the country has become the number two tourist destination in the world, thereby stimulating export of goods and services. The tertiary sector contributes to two thirds of the GDP.

International trade

Trade represents nearly 55% of the Spanish GDP (WTO, average 2008-2010). Suffering from the consequences of the global financial crisis, the Spanish trade deficit worsened in 2009 and again in 2010. Export growth allowed Spain to reduce its trade deficit in 2011, but due the unfavorable market conditions in the eurozone the trade balance could again deteriorate in 2012.

The main trade partners are the countries of the European Union, France being the first destination of Spanish exports (19.2% in 2009). France imports Spanish food products, cars, chemical and textile products. Spain also has good trade relations with the Maghreb countries.