SEMINAR IN ECONOMICS

SUMMER – 2019

COURSE ID: 101945

ASSIGNMENT # 1
ECONOMICAL BACKGROUND, INDICATORS & ANALYSIS
OF SPAIN

SUBMITTED BY:

NAME : SYED FEHAM ALI

CLASS ID : 61694

SUBMITTED TO:

PROF. SYED GHAYYUR ALAM

 BACKGROUND OF SPAIN ECONOMY

Economy - overview: After experiencing a prolonged recession in the wake of the

global financial crisis that began in 2008, in 2017 Spain marked the fourth full year of
positive economic growth in ten years, largely due to increased private consumption.
At the onset of the financial crisis, Spain's GDP contracted by 3.7% in 2009, ending a
16-year growth trend, and continued contracting through most of 2013. In that year,
the government successfully shored up struggling banks - exposed to the collapse of
Spain's depressed real estate and construction sectors - and in January 2014 completed
an EU-funded restructuring and recapitalization program for its financial sector.

Until 2014, credit contraction in the private sector, fiscal austerity, and high
unemployment weighed on domestic consumption and investment. The
unemployment rate rose from a low of about 8% in 2007 to more than 26% in 2013,
but labor reforms prompted a modest reduction to 17% in 2017. High unemployment
has strained Spain's public finances, as spending on social benefits increased while tax
revenues fell. Spain’s budget deficit peaked at 11.4% of GDP in 2010, but Spain
gradually reduced the deficit to about 3.3% of GDP in 2017. Public debt has increased
substantially – from 60.1% of GDP in 2010 to nearly 96.7% in 2017.

Exports were resilient throughout the economic downturn and helped to bring Spain's
current account into surplus in 2013 for the first time since 1986, where it remained
through 2016. Rising labor productivity and an internal devaluation resulting from
moderating labor costs and lower inflation have helped to improve foreign investor
interest in the economy and positive FDI flows have been restored.

1. CURRENCY:

 EURO

2. MAJOR PRODUCTION:

 Grain, vegetables, olives, wine grapes, sugar beets, citrus; beef, pork, poultry,
dairy products; fish

3. MAJOR OUTPUTS (CONTRIBUTION TO GDP):

Agriculture: 2.6%
Industry: 23.2%
Services: 74.2% (2017 est.)
This entry shows where production takes place in an economy. The distribution gives the
percentage contribution of agriculture, industry, and services to total GDP, and will total 100
percent of GDP if the data are complete. Agriculture includes farming, fishing, and forestry.
Industry includes mining, manufacturing, energy production, and construction. Services cover
government activities, communications, transportation, finance, and all other private economic
activities that do not produce material goods.

4. MAJOR TRADING PARTNER:

A. EXPORT PARTNER:
France 15.2%,
Germany 11.4%,
Italy 7.8%,
UK 7.6%,
Portugal 7%,
US 4.4% (2016)

B. IMPORTS - PARTNERS:
Germany 14.7%,
France 12%,
China 7.1%,
Italy 6.7%,
Netherlands 5.2%,
UK 4.4% (2016)

5. MAJOR EXPORTS:

 Machinery, motor vehicles; foodstuffs, pharmaceuticals, medicines, other

consumer goods

6. MAJOR IMPORTS:

 Machinery and equipment, fuels, chemicals, semi-finished goods, foodstuffs,

consumer goods, measuring and medical control instruments

7. POPULATION:

 46.76 Million

8. LABOR FORCE:

 22.75 million (2017 est.)

 9. HDI RANKING:

 26, 0.891 index

10. ECONOMIC RANKING:

 14

11. COMMUNIST OR CAPITALIST %:

Spain's mixed capitalist economy is the 12th largest in the world, and its per capita income
roughly matches that of Germany and France. GDP contracted by 3.7% in 2009, ending a 16-
year growth trend, and by another 0.2% in 2010, making Spain the last major economy to
emerge from the global recession

12. EXPORTS:
 $301.5 billion (2017 est.)
$280.5 billion (2016 est.)

13. EXCHANGE RATES:

 Euros (EUR) per US dollar -

0.906 (2017)
0.9214 (2016)
0.9214 (2015)
0.7525 (2014)
0.7634 (2013)

ECONOMIC INDICATORS OF TEN YEARS

ECONOMIC INDICATORS 2007 2008 2009 2010 2011 2012

Total reserves (includes gold, current US$) [Billions] 19028954 20288385 28051365 31871818 46704854 50588476

Tax revenue (% of GDP) 16.72 13.26 11.01 12.97 12.45 12.24

Gross savings (% of GDP) 21.70 20.40 20.22 19.59 18.65 19.66

Gross domestic savings (% of GDP) 25.34 24.47 23.41 22.24 21.66 21.46

Foreign direct investment, net outflows (% of GDP) 9.91 4.63 1.06 2.64 3.02 -0.19
Foreign direct investment, net inflows (% of GDP) 4.99 4.87 0.90 2.87 2.14 1.86

Current account balance (% of GDP) -9.68 -9.33 -4.25 -3.94 -3.16 -0.26

GDP growth (annual %) 3.77 1.12 -3.57 0.01 -1.00 -2.93

GDP per capita growth (annual %) 1.87 -0.48 -4.42 -0.45 -1.35 -2.99

Trade (% of GDP) 57.41 55.76 46.50 52.34 58.09 59.93

GDP (current US$) [Tillions] 147934 163501 149909 143161 148806 133601

0.00657 0.00665 0.00667 0.00798 0.00798 0.00772

Official Exchange Rate(LCU Per US$, period average)

Fiscal Deficit (% of GDP) 1.92% -4.42% -10.95% -9.38% -9.64% -10.47%

ECONOMIC INDICATORS 2013 2014 2015 2016 2017

Total reserves (includes gold, current US$) [Trillion] 46335469 50411868 53973840 63039919 69400199

Tax revenue (% of GDP) 13.99 14.25 14.42 13.86 13.81

Gross savings (% of GDP) 20.19 20.47 21.53 22.63 22.98

Gross domestic savings (% of GDP) 21.97 21.88 22.77 23.59 24.02

Foreign direct investment, net outflows (% of GDP) 2.02 3.06 4.47 4.49 1.99

Foreign direct investment, net inflows (% of GDP) 3.84 2.53 2.11 3.21 0.47

Current account balance (% of GDP) 1.52 1.03 1.15 2.25 1.90

GDP growth (annual %) -1.71 1.38 3.64 3.17 2.98

GDP per capita growth (annual %) -1.38 1.68 3.73 3.09 2.74

Trade (% of GDP) 61.18 63.00 63.54 63.08 65.71

GDP (current US$) [Trillion] 136185 137691 119908 123749 131431

Official exchange rate (LCU per US$, period average) 0.00837 0.00797 0.00838 0.00884 0.00824

Fiscal Deficit (% of GDP) -6.99% -5.97% -5.27% -4.47% -3.08%

 ANALYSIS OF SPAIN ECONOMY

Spain economy advanced 0.7 percent in the quarter of 3 months from Jan to March
2019 (source https://trading economics .com) after a 0.6 percent expansion it was
the strongest rate since the fourth quarter of 2017 as fixed investment rebounded
by both household a government expanding expended at the same pace. GDP
growth rate in Spain averaged 0.55 percent up till 1995-2019 reaching in all time
the record low of negative 1.60 percent in first quarter of 2009.

In past 10 years Spain GDP was at the highest in 2014 (3.64%).Comparing with
GDP PER Capita which also shows highest progress in the same year 2014.as per
above table GPD in trade shows that in after 2007 it was in declined phase up till
2010 then it start increasing gradually from 2011 to 2017 and now seems stable
and growth can be predicted. According to the result it is concluded that due to
boost in industrial sector (i.e. machinery, equipment and technology),industrial
sector (weapons system) and service sector that help to increase interaction
between household and government expanding at the same pace that will
ultimately indicates rise in GDP (%) and economy growth and further reduce the
unemployment.

GDP:
Spain’s economy advanced 0.7 percent on quarter in the three months to March
2019, after a 0.6 percent expansion in the previous period and matching a
preliminary reading and market expectations, final figures showed. It was the
strongest growth rate since the fourth quarter of 2017, as fixed investment
rebounded while both household and government spending expanded at the same
pace. GDP Growth Rate in Spain averaged 0.55 percent from 1995 until 2019,
reaching an all-time high of 1.60 percent in the first quarter of 2000 and a record
low of -1.60 percent in the first quarter of 2009.

CURRENT ACCOUNT TO GDP:

Spain's current account deficit narrowed sharply to EUR 0.41 billion from EUR
1.31 billion in the same month a year ago, as the goods and services surplus
increased to EUR 2.64 billion from EUR 1.36 billion. On the other hand, the
primary and secondary income deficit widened to EUR 3.05 billion from EUR 2.67
billion in the previous year. From January to April, the current account deficit
widened to EUR 5.96 billion from EUR 3.29 billion in the same period of 2018.
Current Account in Spain averaged -1122.72 EUR Million from 1969 until 2019,
reaching an all-time high of 5059 EUR Million in December of 2017 and a record
low of -12368 EUR Million in January of 2008.
Spain recorded a Current Account surplus of 0.90 percent of the country's Gross
Domestic Product in 2018. Current Account to GDP in Spain averaged -2.29
percent from 1980 until 2018, reaching an all-time high of 2.30 percent in 2016
and a record low of -9.60 percent in 2007.

GDP PER CAPITA:

The Gross Domestic Product per capita in Spain was last recorded at 33146.40 US
dollars in 2018. The GDP per Capita in Spain is equivalent to 262 percent of the
world's average. GDP per capita in Spain averaged 21584.99 USD from 1960 until
2018, reaching an all-time high of 33146.40 USD in 2018 and a record low of
7359.97 USD in 1960.

FOREIGN EXCHANGE RESERVES:

Foreign Exchange Reserves in Spain increased to 64528.31 EUR Million in May

from 63676.55 EUR Million in April of 2019. Foreign Exchange Reserves in Spain
averaged 20998.68 EUR Million from 1962 until 2019, reaching an all-time high
of 64528.31 EUR Million in May of 2019 and a record low of 323.95 EUR Million
in January of 1962.

BALANCE OF TRADE:

The Spanish trade deficit narrowed sharply to EUR 1.61 billion in April of 2019
from EUR 3.01 billion in the corresponding month of the previous year, as exports
advanced 3.8 percent and imports slumped 2 percent. Balance of Trade in Spain
averaged -1788759.70 EUR Thousand from 1962 until 2019, reaching an all-time
high of 634935 EUR Thousand in November of 1988 and a record low of -
9834766 EUR Thousand in December of 2007.

FDI:
Foreign Direct Investment in Spain increased by 1091 EUR Million in April of
2019. Foreign Direct Investment in Spain averaged 2058.18 EUR Million from
1993 until 2019, reaching an all-time high of 23250 EUR Million in October of
2007 and a record low of -9566 EUR Million in December of 2014.