According to the World Bank, Spain's economy is the eighth largest worldwide and the fifth largest in Europe. As of 2007, absolute GDP was valued at $1,439,000 trillion according to the CIA Factbook, (see List of countries by GDP (nominal)). The per capita PPP is estimated at $33,600 (2007), ahead of G7 countries like Italy at $30,900 (2007), France at $32,600 (2007), or Japan at $33,500 (2007). The Spanish economy grew 3.8% in 2007 outpacing all G7 members and all the big EU economies for the 3rd consecutive year. Spain is also the 3rd largest world investor.

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 compares favorably to many other European countries, and which is a marked improvement over rates that exceeded 20% in the early 1990s. Perennial weak points of Spain's economy include high inflation, a large underground economy, and an education system which OECD reports place among the poorest for developed countries, together with the United States and UK. Nevertheless, it is expected that the Spanish economy will continue growing above the EU average based on the strengthening of industry, the growth of the global economy and increasing trade with Latin America and Asia.

The Spanish economy is credited for having avoided the virtual zero growth rate of some of its largest partners in the EU. In fact, the country's economy has created more than half of all the new jobs in the European Union over the five years ending 2005. The Spanish economy has thus been regarded lately as one of the most dynamic within the EU, attracting significant amounts of foreign investment. During the last four decades the Spanish tourism industry has grown to become the second biggest in the world, worth approximately 40 billion Euros, about 5% of GDP, in 2006. More recently, the Spanish economy has benefited greatly from the global real estate boom, with construction representing 16% of GDP and 12% of employment. According to calculations by the German newspaper Die Welt, Spain is on course to overtake countries like Germany in per capita income by 2011.

However, the downside of the real estate boom has been a corresponding rise in the levels of personal debt; as prospective homeowners struggle to meet asking prices, the average level of household debt has tripled in less than a decade. Among lower income groups, the median ratio of indebtedness to income was 125% in 2005. In 2008/ 2009 the credit crunch and world recession manifested itself in Spain through a massive downturn in the property sector. However, Spain's banks and financial services largely avoided the huge problems of their counterparts in the Anglo-Saxon economies, largely due to the more vigilant regulatory regime in Spain. In fact Banco Santander actually came to the assistance of the UK government's bale-out of part of the UK banking sector.

A European Commission forecast predicted Spain would enter a recession by the end of 2008.[54] According to Spain’s Finance Minister, the “Spain faces its deepest recession in half a century”. Spain's government forecast the unemployment rate would rise to 16% in 2009. The ESADE business school predicts 20%.

Source: Wikipedia Encyclopedia

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