Effects of the great recession on the spanish economy

Abstract

This study reviews the effects of the last international crisis on the Spanish economy and the medium-term expectative of economic recovery. The current crisis has occurred after a sharp growth in the Spanish economy for over a decade, higher than the European average. During this period, infrastructures and human capital improved, exports increased, the public debt was reduced and a position of leadership in activities such as tourism, renewable energies and bank intermediation was consolidated. However, similarly to the majority of countries in the world economy, in 2008 Spain fell into deep economic recession. The economic situation is worrying, not so much on account of the significance of the decrease in the GDP, but also on account of the accumulated imbalances in the labour market, in construction and in the financial position of households and businesses, and the faint prospects of recovery as a result. Consequently, the beginning of economic recovery will be later rather than sooner and, in the best-case scenario, not before the second half of 2010. Until then, the unemployment rate, already double that of the EU, will continue to rise and could even reach or exceed 20%, making the possible subsequent recovery even more difficult.