The Spanish Economy- Going Under

Topics: Macroeconomics, Inflation, Recession, Unemployment, Economics, Economy / Pages: 8 (1752 words) / Published: Mar 29th, 2013
Data Plots

Spain experienced a ‘booming’ economy from 1990 to 2007, when growth declined and dipped into negative growth in 2008. It has remained stagnant ever since.

Unemployment in Spain has been relatively high constantly, but it peaked in 1994 and again 2008 onwards. It still has not stopped rising.

Spain had high inflation in the early 90s, but from 1996 onwards in stayed between 2.5% and 4.5%. From 2008 – at present Spain has had very low inflation, which is expected with high unemployment. Inflation has a loose relationship with unemployment, when unemployment is up, inflation is down and visa versa.

Government spending was in decline between 1995 and 2006 (data does not show pre 1995) but had risen dramatically since 2007 due to high unemployment. It is starting to decline again (2010 onwards) due to government austerity programs.

Between 1997 and 2008, the Spanish government were in surplus due to a booming economy. But since 2008 it has run at a budget deficit, spending more than it receives. (Data starts at 1995).

Debt peaked in 1996, and reduced yearly until 2007. The recession hit and it rose rapidly and is still rising. It is also worth noting that it behaves inversely with level of government spending.
Structural problems in the Spanish Economy

The Spanish economy is riddled with problems that cause its poor economic performance in recent years. The government has worked up an enormous debt as it combats some of these problems, whilst worsening some economic variables in the process of combatting others.
When considering the Spanish economy, unemployment is the main problem affecting the population. With the unemployment rate at 26% (Trading Economics 2013) in the last quarter of 2012, a quarter of the workforce is without work. This is incredibly unproductive as the skills and output of this labour is wasted, bad for individuals as they have less disposable income, and bad for government debt as welfare payments higher when



References: The Spanish Economy.com (Author), February 2013 ‘The Spanish economy overview’ – Thespanisheconomy.com http://www.thespanisheconomy.com/en-GB/Paginas/home.aspx C. Penty, E. Ross, B. Sills, June 2012 ‘Spain asks for $125 Billion Bank Bailout as crisis worsens’ – Bloomberg. (http://www.bloomberg.com/news/2012-06-09/spain-asks-for-125-billion-bank-bailout-as-crisis-worsens-1-.html) Trading economics (author), September 2012, ‘Spain 10yr Bonds’ – Trading economics .http://www.tradingeconomics.com/spain/government-bond-yield Karen Domínguez Burke, August 2012, ‘From collapse to austerity in Spain’- Socialistworker.orghttp://socialistworker.org/2012/07/31/from-collapse-to-austerity-in-spain DG ECFIN (Author), February 2013, ‘Economic forcasts- Spain’ – DG ECFIN. http://ec.europa.eu/economy_finance/eu/forecasts/index_en.htm Narcon Drug information department, Febuary 2012 ‘Spain drug addiction’- Narcon http://www.narconon.org/drug-information/spain-drug-addiction-treatment.html Carlos Muella, December 2012,  España recycle –Greenwisebusiness. http://www.greenwisebusiness.co.uk Student no: 1200 5746

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