Economy of Spain

Spain's capitalist mixed economy is the ninth largest worldwide and the fifth largest in Europe. It is also the third largest world investor.[73]

The centre-right government of former prime minister José María Aznar worked successfully to gain admission to the group of countries launching the euro in 1999. Unemployment stood at 7.6% in October 2006, a rate that compared favorably to many other European countries, and especially with the early 1990s when it stood at over 20%. Perennial weak points of Spain's economy include high inflation,[74] a large underground economy,[75] and an education system which OECD reports place among the poorest for developed countries, together with the United States and UK.[76]

However, the property bubble that begun building from 1997, fed by historically low interest rates and an immense surge in immigration, imploded in 2008, leading to a rapidly weakening economy and soaring unemployment. By the end of May 2009 unemployment already reached 18.7% (37% for youths).[77][78]

Before the current crisis, the Spanish economy was credited for having avoided the virtual zero growth rate of some of its largest partners in the EU.[79] In fact, the country's economy created more than half of all the new jobs in the European Union over the five years ending 2005, a process that is rapidly being reversed.[80] The Spanish economy has been until recently regarded as one of the most dynamic within the EU, attracting significant amounts of foreign investment.[81]

The most recent economic growth benefited greatly from the global real estate boom, with construction representing an astonishing 16% of GDP and 12% of employment in its final year.[82] According to calculations by the German newspaper Die Welt, Spain was on course to overtake countries like Germany in per capita income by 2011.[83] However, the downside of the now defunct real estate boom is a corresponding rise in the levels of personal debt: as prospective home owners struggled to meet asking prices, the average level of household debt tripled in less than a decade. This placed especially great pressure upon lower to middle income groups; by 2005 the median ratio of indebtedness to income had grown to 125%, due primarily to expensive boom time mortgages that now often exceed the value of the property

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