The Economic Crisis in Spain

Topics: Inflation, Central bank, Economics Pages: 2 (685 words) Published: May 6, 2008
The Economic Crisis in Spain
Spain is one of the powerful state with an expanssion economy in EU from 1995. His GDP was growing year by year without any problem , but in 2007 the economy of Spain start to fall down, because of a collapse in Housing Market, that can lead to a recession or a slowdown.

The economical boom of spain started in 1995. The construction of buildings brought Spain the biggest increase in economy in EU , in the last 10 years .The main ressource of Spain’s GDP was the Housin Market that consisted about 5%-15% of Real GDP every year. The oproximately rate of growth of GDP for the last 4 years was about 3%-4% per year, but the economists assume that for 2008 the growth rate will be about 1%, that is meaning that there is a slowdown, and if the gouvernment will don’t care about it , this decreasing can lead to a recession.

Spain’s Real GDP 2003-2007
GDP at market prices (€bn)7838419089811054
GDP (US$ bn)885.41045.71130.81231.71434.3
Real GDP growth (%)
Consumer price inflation (av; %)
Population (m)(c)42.743.244.144.745.2
Exports of goods fob (US$ bn)158.0185.2196.6216.5248.3
Imports of goods fob (US$ bn)203.2251.9281.8317.1359.1
Current-account balance (US$ bn)-30.9-54.9-83.4-106.4-126.3 Foreign-exchange reserves excl gold (US$ bn)19.812.49.710.89.3 Exchange rate US$:€(av)

The world crisis of credits stopped the economic increase of Spain, that was supported by the Housing Market, that is the main ressource of economy of this country. The recession’s problem is that the Spain’s bank had credited too much sold property, and now the Central Bank of Spain is afraid of the consequance that was happened in United States. U.S. had a same crisis in 2007 , there were sold too much new houses , that was credited by the banks, and at the end there...
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