Global Economy In Spain

Spain has the 13th largest economy by nominal GDP in the world. It is the 5th largest economy in the European Union making it very important when referring to the global economy. The Spanish economy began to slow down in late 2007 and officially entered into a recession in 2008. GDP contracted by 3.7% in 2009, which ended a 16-year growth trend, and by 0.3% in 2010, however GDP expanded 0.4% in 2011, before again contracting by 1.4% in 2012. The economy again fell into recession as deleveraging in the private sector, fiscal consolidation, and a soaring unemployment rate (from 8% in 2007 to 26% in 2012.) took its toll on domestic demand and investment. Despite the poor recent Spanish economy, Spain's international trade situation has improved. In May 2013, Spain had a 2.19 billion (euros) trade surplus, narrowing the trade deficit.

The economic downturn has also hurt Spain's public finances. The government budget deficit peaked at 11.2% of GDP in 2010 and the process to reduce the deficit has been slow despite the central government's efforts to raise new tax revenue and cut spending. Spain reduced its budget deficit to 9.4% of GDP in 2011, and to roughly 7.4% in 2012, which was above the 6.3% target settled upon between Spain and the EU. The government is also taking steps to support the banking system, by using $130 billion in EU funds to recapitalize the struggling banks exposed to the collapsed domestic construction and real estate sectors.

The current GDP estimated in 2012 is $1.434 trillion giving spain the 13th highest GDP in the world. However it was 1.4% less than last years GDP. This could be due to the fact that people have lost faith in their government and economy. This fear stops people from investing and puttin...

... middle of paper ...

... back into the economy.

With the economy on its heels the people go to the black market in order to buy necessary goods. According to Spain’s Foundation for Financial Studies, the spanish black market is worth an unseemly 20% of the country's GDP. The money spent on these items is money that isn't going back to the government. It brings in a lot of foreign money so this benefits the economy but not the Government.

The outlook on Spain's economy is a positive one, it will take time for the economy to be back up on its feet. If it were up to me i would start with Spains healthcare then move on to education. If we can improve these two areas we can slowly move on to the unemployment rate. Spain has a strong trade relationship with other countries, so it will make things easier to improve. If these steps are taken then Spain can overcome the downturn in the economy