Spain: country overview

12 February 2013, 19:37 CET

— filed under: Spain

Spain's mixed capitalist economy is the 13th largest in the world, and its per capita income roughly matches that of Germany and France. The government's major focus for the immediate future will be on measures to reverse the severe economic recession that started in mid-2008.

Year of EU entry: 1986

Member of Schengen area:Yes

Political system: Constitutional monarchy

Capital city: Madrid

Total area: 504 782 km²

Population: 45.8 million

Currency: euro

Listen to the official EU language: Spanish

Country overview

High plateaux and mountain ranges such as the Pyrenees and the Sierra Nevada dominate mainland Spain. Running from these heights are several major rivers such as the Ebro, the Duero, the Tagus and the Guadalquivir. The Balearic Islands lie offshore in the Mediterranean while the autonomous Canary Islands are to be found off the African coast.

Spain is a constitutional monarchy, with a hereditary monarch and a parliament with two chambers: the Cortes. The 1978 constitution values linguistic and cultural diversity within a united Spain. The country is divided into 17 autonomous communities (regions) which all have their own directly elected authorities. In Catalonia, the Basque Country and Galicia, the regional languages have official status alongside the national Spanish language, which is also called Castilian.

Spain’s service and manufacturing sectors are strong, while agriculture (especially fruit and vegetables, olive oil and wine) and tourism are also very profitable.

From Velázquez in the 17th century, through Goya in the 18th and 19th, to Picasso, Dali and Miro in the 20th, Spain has a rich artistic culture. Spanish Flamenco music and dance are widely admired around the world while Cervantes' novel Don Quixote is one of the landmarks of modern European literature. Spanish film directors such as Pedro Almodóvar, Alejandro Amenábar and Luis Buñuel have received several international prizes.

Spanish cuisine is known for its paella (a rice dish with chicken, seafood and vegetables), tortilla (omelette with potatoes) and sangria (red wine served with fruit).

Economy overview

After almost 15 years of above average GDP growth, the Spanish economy began to slow in late 2007 and entered into a recession in the second quarter of 2008. GDP contracted by 3.7% in 2009, ending a 16-year growth trend, and by another 0.3% in 2010, before expanding moderately in 2011, making Spain the last major economy to emerge from the global recession. The economy, however, has once again fallen into recession as deleveraging in the private sector, fiscal consolidation, and continued high unemployment weigh on domestic demand and investment, even though exports have shown signs of resiliency. The unemployment rate rose from a low of about 8% in 2007 to roughly 25% in 2012. The economic downturn has also hurt Spain's public finances. The government budget deficit peaked at 11.2% of GDP in 2010 and the process to reduce this imbalance has been slow despite Madrid's efforts to raise new tax revenue and cut spending. Spain reduced its budget deficit to 9.4% of GDP in 2011, and roughly 6.7% of GDP in 2012, above the 6.3% target negotiated between Spain and the EU. Although Spain's large budget deficit and poor economic growth prospects remain a source of concern for foreign investors, the government's ongoing efforts to cut spending and introduce flexibility into the labor markets are intended to assuage these concerns. The government is also taking steps to shore up the banking system, namely by using up to $130 billion in EU funds to recapitalize struggling banks exposed to the collapsed domestic construction and real estate sectors.

Source: Europa, CIA World Factbook