Spain Economy

Economy

At the end of Franco’s dictatorship, in 1975, Spain was still a predominantly agricultural country. The strong economic development known between the 1950s and early 1970s was blocked by the impact of the 1973 energy crisis and the consequent economic crisis that lasted during the entire transition period towards democracy. Since the second half of the nineties Spain has instead experienced one of the fastest economic development in Europe. In the period 1997-2007, the GDP grew at an annual average of 3.8%, and in the same period the per capita income more than doubled. Meanwhile, the contribution to the GDP of the various economic sectors has been changing. The tertiary sector has passed from a subordinate position to the current one. It currently contributes to over two thirds of the gross domestic product driven by the service sector and tourism: Spain is the second European destination after France and fourth overall in the world for arrivals from abroad. Despite careful budgetary policies, the 2008-09 global economic crisis resulted in a high deficit (11% of GDP in 2009, 9.4% in 2010, 10.4% in 2012 and 5.9% in 2014), well beyond the 3% threshold formally allowed by the Maastricht parameters, which has led the country into a severe recession. For Spain economics and business, please check businesscarriers.com.

The crisis has uncovered the structural weaknesses that afflict the country: on the one hand, the excessive financial exposure of Spanish banks has affected the credit squeeze, on the other hand the bursting of the housing bubble has brought down the value of homes (-12 % since the start of the crisis) plunging the construction sector into a serious crisis. The heavy legacy of the Zapatero era has thus forced the current Rajoy government to launch a series of reforms in public finance, taxation and the labor market aimed at rebalancing public finances and reducing unemployment. (reached 26%), in particular that of young people (over 50%). The adoption of these measures allowed the Spanish executive to receive financial assistance from Brussels, quantifiable at 100 billion euros in aid from the European Stability Mechanism (ESM), of which about forty have already been repaid. Between 2014 and 2015 the country’s economy returned to growth with a GDP increase of just over 3% for the last year, far exceeding the European average. The other economic indicators all registered improvements: the spread between Spanish and German government bonds it decreased again and the estimates on Spanish debt were lowered. However, the recovery is not yet consolidated and the consequences of the social costs of the crisis – the high unemployment rate, first of all – have made their influence felt in the December elections.

Energy and environment

Spain produces about 40% of the coal consumed and very small quantities of oil and gas. It therefore depends to a large extent on imports, since it buys 60% of the coal it uses from abroad, 98% of oil (which is the main source of the national energy mix) and almost 100% of gas. Gas imports are quite diversified: thanks to the Meg and Medgaz pipelines(the latter, operational since March 2011, directly connects Spain and Algeria bypassing Morocco), Spain can receive respectively a maximum of 12 and 8 billion cubic meters per year from Algeria. In 2012 about 40% of the total gas arrived from Algeria. On the other hand, the country owns six regasifiers and therefore also receives liquefied gas from Nigeria (13.9%), Qatar (13.8%), Norway (11.5%), Peru (7.2%) and Trinidad and Tobago (7.5%). Spain has thus become the first country in E u for diversification and development of the liquefied natural gas technology (lng) and the fourth world importer of lngafter Japan, South Korea and the United Kingdom. These results, which significantly improve the country’s level of energy security, are a recent achievement given that, still in 2001, the country was importing 70% of its gas from Algeria.

Oil imports are also quite diversified: in 2008 the country’s first energy source came from around 20 states and in particular from Russia (15%), Mexico (13%), Iran (12%), Saudi Arabia (11%), Libya (10%) and Nigeria (9%). Spain also owns ten oil refineries.

To ensure greater security, the country has also promoted the development of nuclear energy and renewables. Six nuclear power plants are in operation producing about 13% of the energy mix, although the government plans to reduce that share. Conversely, renewables still account for a small share of the energy mix (6.1%, excluding wood and other biomass), but the government is promoting their development, especially wind energy (Spain has the third highest generation capacity in the world). Close cooperation has also been initiated with Portugal, with the creation of the Iberian electricity market, and a similar single gas market is being worked on.

As regards environmental policy, the country adopted in 2007 a strategy against climate change and to produce clean energy, which includes numerous measures to improve efficiency, stimulate the development of renewables and research. In addition, the Spanish government has pledged to reduce CO 2 emissions by 80% by 2050, planning to eliminate the consumption of coal.

Spain Economy