Spain Economy

Economic profile

Spain is a market economy, modern economy. Characteristic of the Spanish economic system are free entrepreneurship, an efficient technical infrastructure and a domestic market with high purchasing power. State economic policy largely retains itself from economic activity and merely creates the legal framework for a fair order of competition. In the index for economic freedom as the basis of human prosperity development, Spain is in the top quarter in 2018 with 33/166. With a gross domestic product (GDP) of 1.25 trillion. In 2019, Spain will achieve the fourth largest economic output in the European Union. The World Bank Spain therefore belongs to the group of economies with high income (so-called “high income economies”).

Spain’s economic performance compared to other EU countries

According to countryaah, major industries in Spain are the food, chemical and automotive industries. In the service sector, the tourism sector is the most important sector with a share of the GDP of almost 15%. In addition, the transport sector and the provision of company-related services such as banking, trade and consulting make a significant contribution to economic performance. Even if the agricultural sector hardly plays a role in the economy as a whole, Spain is one of the largest European vegetable producers and has the largest olive harvest in the world. In the province of Almería in the south of the country there is the world’s largest greenhouse culture (so-called “Mar de plastico”; German plastic sea), where many millions of tons of vegetables and fruit are produced for the world market all year round.

Overall, there is a corporate structure in Spain that is strongly characterized by medium-sized companies. Small and medium-sized enterprises with fewer than 250 employees make up the lion’s share of all enterprises with a share of 99.8%; 94% of the companies have fewer than nine employees. Regionally, there are major imbalances in economic development within Spain with a correspondingly different distribution of wealth. The industrial centers of Catalonia and the Basque Countryaround Bilbao as well as the capital region of Madrid are considered dynamic economic centers with relatively high incomes and low unemployment. In contrast, show the agricultural region of Andalusia in the south and the periphery of the Extremadura region on the border with Portugal, greater economic development deficits.

With participation in the European single market in 1993, WTO accession in 1995 and as a founding member of the euro zone in 2002, Spain is deeply integrated into global value chains. In the index for global competitiveness, Spain ranks 23/141 in 2019. As a result, Spanish trade dynamics boomed with only brief interruptions over many decades (trade volume as% of GDP: 1960: 8.4%; 2018: 34%). Important industrial export goods are motor vehicles, machines and plastic components. The European Union (59%), Great Britain (7%) and the USA (5%) are important trading partners.

Current economic development

High growth rates, a gradual reduction in unemployment and rising household incomes characterized the economic development path after the financial and economic crisis subsided. With GDP growth rates of over 3%, Spain temporarily recorded the strongest economic dynamism within the EU. As a legacy of the severe economic crisis of 2007-2013, the government debt, which is extremely high by international standards, and the very high unemployment rate, especially among younger people, remained.

Spain’s economic development in comparison

The main factors behind this development were an improvement in international competitiveness through reforms on the labor and financial markets and a pronounced tourism boom that began in 2014. After France, Spain had the most guest arrivals in the world in 2019 (84 million); Together with related industries such as construction, transport and food, numerous jobs have been created to secure income for low-skilled people on the Spanish labor market.

Disadvantages of this branch of the economy result from its pronounced seasonality and its susceptibility to economic fluctuations in the guests’ countries of origin. The COVID-19 pandemic brought the long-term tourism boom in 2020 to an abrupt end.

Economy and environment

The economic expansion of Spain in the last few decades is associated with numerous environmental burdens. The ecological footprint as a sustainability indicator of the human lifestyle was in 2017 with 4.03 gha / person in the global middle field (world: 2.87 gha / person). The standard of living of the Spanish population therefore consumes considerably more natural resources of soil, water and air than the environment actually makes available.

Specifically, the energy consumption of households, businesses and transport is Spain’s biggest environmental problem. The emission of CO ₂ climbed by over 15% between 1990 and 2018, which is the largest increase within the EU after Cyprus. The CO ₂ emissions per capita in 2018 were 7.1 tonnes, however, below the EU average (EU-27: 8.4t / capita; Germany: 10.4t / capita).

Further relevant pollution occurs with the uncontrolled erosion of land, especially through construction activity in the suburban area and in the tourist centers along the coasts, the high traffic and noise pollution in the big cities as well as poor air quality in the heavily industrialized regions of Madrid, Catalonia and the Basque Country.

The last serious environmental problem is soil erosion. Excessive deforestation to gain pasture and arable land, overgrazing and intensive agricultural use of the soil result in a continuous deterioration in soil quality with negative consequences for natural ecosystems and biodiversity.