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Spain's mixed economy supports a GDP that on a per capita basis is 87% of that of the four leading West European economies. The center-right government of former Prime Minister Aznar worked to gain admission to the first group of countries launching the European single currency, the euro, on 1 January 1999. The Aznar administration continued to advocate liberalization, privatization, and deregulation of the economy and introduced some tax reforms to that end. Unemployment fell steadily under the Aznar and Zapatero administration. It now is 8.7% (December 2005). Though still high, this level of unemployment compares favorably to rates of 20% and above in the early 1990s. It also favorably compares with the other large European countries, most notably, Germany with unemployment of approximately 12%. Growth of 2.4% in 2003 was satisfactory given the background of a faltering European economy, and has steadied since at an annualized rate of about 3.3% in mid 2005 and 3.5% in the first quarter of 2006. There is a widespread concern, however, that the growth is too concentrated upon a few sectors. The Prime Minister Rodríguez Zapatero plans to reduce government intervention in business, combat tax fraud, and support innovation, research and development, but also intends to reintroduce labor market regulations that had been scrapped by the Aznar government. Adjusting to the monetary and other economic policies of an integrated Europe — and reducing unemployment — will pose challenges to Spain over the next few years. According to World Bank GDP figures from 2005, Spain has the ninth largest economy in the world, and the fifth largest in Europe. There is general concern that Spain's model of economic growth (based largely on mass tourism, the construction industry, and manufacturing sectors) is faltering and may prove unsustainable over the long term. The first report of the Observatory on Sustainability (Observatorio de Sostenibilidad) — published in 2005 and funded by Spain's Ministry of the Environment and Alcalá University — reveals that the country's per capita GDP grew by 25% over the last ten years, while greenhouse gas emissions have risen by 45% since 1990. Although Spain's population grew by less than 5% between 1990 and 2000, urban areas expanded by no less than 25% over the same period. Meanwhile, Spain's energy consumption has doubled over the last 20 years and is currently rising by 6% per annum. This is particularly worrying for a country whose dependence on imported oil (meeting roughly 80% of Spain's energy needs) is one of the greatest in the EU. Large-scale unsustainable development is clearly visible along Spain's Mediterranean coast in the form of housing and tourist complexes, which are placing severe strain on local land and water resources. Recent developments include the construction of reverse osmosis plants along the Spanish Costas, to probably meet over 1 % of Spain's total water needs. Other perennial weak points of Spain's economy include one of the lowest rates of investment in Research and Development, and in education in the EU. This is particularly worrying, given that the country's generally poorly-trained workforce is no longer as competitive in price terms as it was several decades ago. As a result, many manufacturing jobs are going abroad — mainly to Eastern Europe and Asia. |
Spain Information: Inside
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