Spain - Economy

Agriculture, livestock, and mining—the traditional economic mainstays—no longer occupy the greater part of the labor force or provide most of the exports. In order to offset the damage suffered by the industrial sector during the Civil War and to cope with the problems created by Spain's post-World War II isolation, the Franco regime concentrated its efforts on industrial expansion. Especially after 1953, the industrial sector expanded rapidly. In terms of per capita income, however, Spain still ranks among the lowest in Western Europe, with an estimated GDP (purchasing power parity) of $18,900 per person in 2001. From 1974 through the early 1980s, the Spanish economy was adversely affected by international factors, especially oil price increases. Tourism is a major source of foreign exchange, and in 2000 was generating 10% of GDP (up from 3.3% in 1995) and employing, directly or indirectly, one eighth of the labor force. Spain is the world's second most popular tourist destination, after France. The annual GDP growth rate during 1974–77 was 3%, higher than that in other OECD countries, but the inflation rate reached 24% in 1977. Real GDP growth slowed to about 1.6% during 1980–85, averaged 3.5% between 1985 and 1992, but slowed to a yearly average of 1.3% between 1993–95. By 1998, however, it had increased to 3.5%., and in 1999 and 2000, averaged over 4%. The global economic slowdown after 2001 helped reduce GDP growth to 2.5% in 2001 and to 1.9% in 2002. Consumer prices rose 37% between 1989 and 1995, and unemployment rose from 17.3% to 21.3%, the highest in the EU. Macroeconomic improvements from 1995 to 1998, however, were sufficient for Spain to be included in the first group of EU members to enter the European Monetary Union (EMU) in 1999. By 1998 inflation had been reduced to 1.8%. From 1999 to 2002, inflation was held to between 2% and 4%, although the inflation differential with the rest of the euro area persisted. Unemployment fell to 18.7% in 1998 and then to 15.7% in 1999. Although still quite high, unemployment continued to fall—to 13.9% in 2000 and 10.5% in 2001—before registering an increase to 11.2% in 2002.