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Economy of Spain

Spain inherited a fascist economy from Francisco Franco and firing was complex and expensive. Interventionism was widespread: basic products like bread and sugar had their prices fixed by the government. Large public firms controlled all sectors seen as strategic. Monopoly was common (e.g.: Telephone, tobacco, television, petrol, etc.). Shops had fixed opening and closing times and were not free to open all day, all week. Banking was controlled. Both passive and active interest rates were fixed by the government. All these rigidities and more lead to 10 years of industrial crisis (1975-1985), reduced convergence with Europe and expressed the need to modernize the economy and join the EC. Some moves away from these restrictions and controls, and large infrastructure projects in the 1960s resulted in strong economic growth in the so called "Spanish Miracle", but still left Spain lagging most of Western Europe, but ahead of the Warsaw Pact.

Spain's accession to the European Community, now European Union (EU), in January 1986 required the country to open its economy, modernize its industrial base, improve infrastructure, and revise economic legislation to conform to EU guidelines. In doing so, Spain increased GDP growth, reduced the public debt to GDP ratio, reduced unemployment from 23% to 10%, and reduced inflation to under 3%. The fundamental challenges remaining for Spain include reducing the public sector deficit, decreasing unemployment further, reforming labor laws and investment regulations, lowering inflation, and raising per capita GDP.

Following peak growth years in the late 1980s, the Spanish economy entered into recession in mid-1992. The economy recovered during the first Aznar administration (1996-2000), driven by a return of consumer confidence and increased private consumption, although growth has slowed in recent years. Unemployment remains a problem at 8.7% (December 2005), but this still represents a significant improvement from previous levels. Devaluations of the peseta during the 1990s made Spanish exports more competitive, but the strength of the euro since its adoption has raised recent concerns that Spanish exports are being priced out of the range of foreign buyers. However, this has been offset by the facilitation of trade among the euro nations.

Statistics

GDP: purchasing power parity - $1081.332 billion (2006 est.)

GDP - real growth rate: 3.4% (2005 est.)

GDP - per capita: purchasing power parity - $26,009 (2006 est.)

GDP - composition by sector:

agriculture: 3.4%

industry: 30.1%

services: 66.5% (2003 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:

lowest 10%: 2.8%

highest 10%: 25.2% (1990)

Inflation rate (consumer prices): 2.6% (2003 est.)

Labor force: 17.1 million (2001 est.)

Labor force - by occupation: services 64%, manufacturing, mining, and construction 29%, agriculture 7% (2001est.)

Unemployment rate: 8.7% may 2006

Budget:

revenues:

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