Post 16: Spain will be just fine!

Spain is one of the world’s most developed countries with a very important role in the international political and economic scenario. The country has well proved its capacity to effectively translate consistent economic growth into significant investments, including communications networks, comprising thousands of miles of highways, high-speed train services and satellite facilities. This capacity and the constant effort made to ensure the competitiveness of its economic structure have enabled Spain to be placed among the world’s main economic players. Even with the current economic crisis in Spain, countries including the U.S. say that Spain will certainly recover and remain on the world stage.

Post 15: concerns of the citizens

This year’s list of concerns of Europe’s citizens is dominated by the financial and economic crisis. Despite being temporarily knocked from first place last year, problems on the labor market have climbed back up to first place in the list of concerns, as anxieties have grown. This is one of the findings of GfK “Challenges of Europe”, a survey carried out annually on behalf of GfK Association. There has been a very steep rise in the level of anxiety about economic stability. Whereas the issue did not appear in the European top ten in 2008, it is now the second biggest concern. Conversely, worries about prices and purchasing power development have eased this year. Unemployment is also the number one concern in Germany as well as Spain.

Post 14: Importing history

Since Spain joined the United Nations in the year 1955, it has shown its keenness to conduct economic trade with partners around the world. It was admitted to the World Bank in just three years after that. Opening up of economy and importing in Spain has been the key component in it's over all growth.

Ever since the emergence of Francisco Franco as the leader of Spain after the Civil War, Spain has made huge gains economically. After its acceptance in the European Union in the year 1986, Spain adopted the new importing system that changed procedures for importing in Spain.

Post 13: The housing decline

Spain's Economy: Spanish house prices have declined by about 11% from their peak in the first quarter of 2008 but further adjustment will follow in the biggest of the at risk economies in the Eurozone.

Sovereign risk and the so-called EMU (European Monetary System) periphery are once again taking center stage, according to economists at US investment bank Morgan Stanley who have argued that the countries generally associated with this group (Italy, Spain, Greece, Portugal and Ireland) are a very heterogeneous bunch and that some of them are no longer a ‘pure' peripheral country such as Italy.

Spain debt rating

Last Wednesday Spain became the third country in Europe to have their debt rating downgraded. After downgrading both Portugal and Greece over the past two weeks, the ratings agency Standard & Poor's slashed its rating of Spain by one notch. This downgrade had an immediate effect on shares in Europe sending them plummeting to a seven week low. Spain's long-term sovereign debt rating was reduced to "AA" from "AA+." The short-term rating was left unchanged at "A-1+." Spain's 2010-2016 economic growth forecast was reduced to an annualized rate of 0.7% from a previous 1%. The growing fear is that the fallout from Greece and even Portugal — which together compose just 5 percent of European economic activity — could be a mere sideshow if Spain, with its much larger economy, has difficulty repaying its debt.

Spain's high unemployment rate

For the first time in over a decade, Spain's unemployment rate rose over 20%. The country has recently rose from 18.8% to 20.1% unemployment rate. This high rate poses a large problem for the young people in Spain. Back when the employment rate was high and the Spanish economy was booming, hundreds of thousands of young people dropped out of school to join the workforce. Now a days these youths are facing very trying times because they are a part of a "lost generation" of unemployed people between the ages of 16-24 with an unemployment rate of 42.9%. This is more the double the overall rate and the highest in Europe. The sole reason behind this outrageous unemployment rate is because the sectors that employ young people in the greatest numbers — fast food, construction, retail — are expected to take the longest to recover. Another factor contributing to this rate is that Spain makes it very easy to put young people to work. Spain is even worse off in comparison to other countries that traditionally have a high unemployment rate among young people. Some examples include Poland with a rate of only 21.2, and Slovakia with a rate of 27.9%.

Tourism in Spain

This week I am going to talk about tourism in Spain, however i will try not sound like a brochure and try to keep it relative to Macroeconomics. Spain has always been a very profitable country in their tourism. The tourism boom really took off for Spain in the mid 1950's. The tourist industry has greatly increased since this time. In 1950 Spain had less then one million tourists, however over the years this number has skyrocketed to 50 million in 2003. The tourist boom had a significant, and not always completely beneficial, impact on the Spanish economy. Although this growing activity was a welcome source of foreign currency and created new employment opportunities, it also diverted capital investment and construction efforts away from more stable economic activities to a sector dutiful to seasonal fluctuations, the whims of fashion, and worldwide economic conditions.
Although this growth in tourism had some hidden negative effects on the Spanish government, nevertheless in 2003 net tourism accounted for 10% of total GDP. Spain had the highest net GDP in the world a few years ago in 2003. The United States had higher gross revenues, but its tourist expenditures exceeded revenues by a considerable margin.
Today the tourist industry in Spain has seen a decrease in numbers due to the global recession. Last summer Spain saw a 6.1% decrease in summer visitors. The country is among the top three in tourism in the world, measured by both arrivals and income earned. Since Spain has become reliant on their profitable tourist market , Spain's government approved a $1.42 billion aid plan to help the tourism sector ride the economic recession. Hopefully Spain will be able to sustain their tourism through these difficult times of recession and see an increase back to where their numbers use to be.

Spain imports/ exports

This week I am going to spend some time on Spain's imports and exports. Spain's trade is very significant to it's economy because it accounts for more then half of the countries total GDP. Spain has gone though times of high trade deficit over the past years. In 2009 Spain's trade deficit reached 77.5 billion. There are a few factors that contribute to this deficit. leading factors to this deficit are predominantly the nation’s increasing reliance on imported petrol and decreased market competitiveness. In addition, the strength of the Euro has also had an impact on the trade deficit. Since Spain has adopted the Euro, exports have steadily declined due to increased prices of exports.

Spain's major exports include motor vehicles, machinery, pharmaceuticals, foodstuffs,and medicines. The net exports for 2009 were $215.7 billion. This number was decreased by 70.2 billion from the previous year. Some major imports in Spain include mechanical and electric machinery, and iron and steel. A lack of resources in the nation, particularly oil, has created a wide spread gap between Spain's imports and exports. Spain’s imports were valued at $293.2 billion in 2009, which was a considerable decline from the 2008 level of $415.5 billion. Spain's major partners in trade for both exports and imports are from the EU region.

The spendings of Holy Week

It’s hardly penitence when it comes to the economy of Holy Week in Spain. The people of Sevilla, Spain, spare no expense when it comes to making the Easter processions of holy week the most elaborate and grand in all of Spain. This week is a major tourism week for Spain, and specifically for Sevilla. The hotels and restaurants are filled to the brim as well as the streets with tourists and locals celebrating the festivities of holy week. This year Sevilla brought in an estimated 160 million € from the processions of holy week. This amount does not even include the added value to the city in tourism promotion.
Each Brotherhood spent an average of 73,000 € to prepare their thrones for the processions. What is a Brotherhood? The Brotherhoods are associations of members of the parish who organize themselves to celebrate holy week with processions. Every Brotherhood dedicates itself to a certain scene, e.g. the burial of Christ, the taking of Christ’s body off the cross, the flogging of Christ by Roman soldiers, the judgment of Christ by Pilate, etc. As such, they also perform specific functions during the holy week. For example, the Brotherhood of Death and Resurrection of the Lord will be the one to first announce resurrection on Saturday midnight. And the three grenadier Brotherhoods dedicated to the Virgin will take to the streets on Friday of Pain – the day commemorating the Pain of the Mother. Put together in one procession, they develop the whole story of the Passion before your eyes, in a sequence of frames.
Some other major expenses of holy week include the cost of the carvings and statues, the floral decorations of the "palo", and the tunics worn by the brotherhood. The maintenance of the statues and carvings used in holy week average a spending of about 5.2 million € a year. Although many of the tunics in Sevilla are either purchased on the black market, or sewn by families, an average of 600,000 € is still declared each year from tunics. Then their is the high cost of the floral decorations mainly used to decorate the "Palo". Each brotherhood spends an average of 2,200 to 4,000 € a year on flowers used to decorate the "Palo". The processions of Holy Week are highly important to the culture of Spain as well as to their tourist industry.

Spain contributes to the EU bailout

Recently a bailout package has been put together to help save Greece's economy and by extension, strengthen the Euro. Spain has contributed to this joint EU/IMF or (international monetary fund), bailout package by offering 2 billion Euro's. Spain's prime minister reminded commentators that this money was not a gift but a loan that would be paid back with interest. This rescue plan is only going to be used in the case that Greece cannot re-finance its debt and raise funds from financial markets. This Euro zone-IMF deal has been confirmed by German, Portuguese, Spanish and Greek officials at the summit of European Union leaders.
European and U.S. stock markets rose earlier Thursday on news that a financial rescue package for Greece was taking shape. Market worries over Europe’s weeks-long hesitation to set up a safety net for eurozone members who can’t pay their bills has sent the euro sliding to a 10-month low. The euro traded at $1.33, down from $1.51 in November.

Spain is urged to switch to Greenwich Mean Time

In a previous blog I discussed how Spain is having difficulties keeping up with the rest of the European Union due do being less productive then most of the Union. Recently a government backed commission has surprised Spain by proposing that they switch back to Greenwich Mean Time. This commissions aim is to increase productivity in Spain and put an end to the "siesta culture". For those who are unfamiliar with Greenwich Mean Time it is a term originally referring to mean solar time at the Royal Observatory in Greenwich, London. It refers to time at the prime meridian at zero degrees longitude passing through Greenwich, London, also known as Universal Time (UT).
In March of 1940 Spain switched from Greenwich Mean time to "Berlin time" which is central European time. At the end of World War II Spain did not switch back to Greenwich time and has remained using "Berlin Time" for the past 60 years. Spain's work culture is unique because of their longer work hours with excessively long breaks. A typical worker in Spain has 30 minute coffee breaks, two hour lunch's and late evening dinners. This is very different from many other European countries were many workers eat their lunches at their desks with no breaks. Ironically, Spain is the European country were most work hours are spent however, they are among the least productive countries in Europe. The main factor against this switch is that the work pattern of Spain is claimed to be far more healthy then the nonstop working pattern of other northern European counties. It is uncertain if this switch will truly increase productivity in Spain when the workers are already so accustomed to their "siesta culture". An interesting study shows that Spain's neighbor Portugal who runs off the Greenwich Mean Time, is in fact less productive then Spain. This raises the question if Spain's time zone is truly to blame for the countries low productivity.

Post 6: VAT rates to be increased in July

Spain is planning to increase the IVA/VAT rate by July of this year. The increase is as follows: The 4% rate which includes "basic needs" will be kept at 4%, the 7% rate which includes a wider variety of goods and services such as contact lenses, funeral services and restaurants, will be raised to 8%, and the "general rate" which is now 16% and includes all other products such as tobacco, and alcoholic drinks, will be raised to 18%. This plan to raise the VAT rates has upset the Partido Popular (Peoples Party). The party is demanding that congress debate the effects that this increase will have on the economy before it goes into effect in July. The European Commission has said that this increase could be a threat to Spain exiting the recession. Soraya Sáenz de Santamaría, who is the spokesman in congress for the Partido Popular, has recently met with her socialist counterpart from the government José Antonio Alonso to discuss the issue at hand. Alonzo's argument was that the faith that the markets have in Spain would be damaged by the Partido Popular's plan for debate. The minister for tax and the economy Elena Salgado, agrees with Alonzo that consumer spending could be damaged however, she does not feel that GDP would be affected. The Partido Popular is sticking by their demand for debate in congress and requests that the increase be suspended until such debate takes place.

Post 5: Spain's cost of living

Spain adopted the Euro (one Euro= 100 Euro cents) as the countries official currency in 2002. Spain uses the Euro in the following denominations:
1/2/5 cent coins which feature the Santiago de Compostela cathedral, 10/20/50 cent coins which feature the author Cervantes (Don Quijote),1 and 2 Euro coins which bare the image of King Carlos the I, and 5/10/20/50/100/200 and 500 Euro notes which do not depict any Spanish designs because the notes are the same throughout all of Europe. Since the Euro was introduced Spain has experienced a raise in the cost of living expenses because prices rounded up to the nearest Euro. Although Spain is considered one of the cheapest European Countries, many larger cities property prices are still very high in comparison with the earnings. Here are some examples to get a rough idea of some of the living costs in Spain:

Electricity: 35-40 Euro/per month per 2 people
Telephone: 25 Euro/per month plus calls
Eating out: 12 Euro/per person
Movie theater tickets: 6 Euro/per person

Can Spain keep up with the EU?

In 1986 Spain joined the European Union and immediately began to become a prime example of what a nation can accomplish with a steady continuous high growth performance. Before joining the union, Spain’s per capita income was way below the average for the EU. However, shortly after joining the EU, the nation made a dramatic shift in their per capita income and climbed slightly above the EU’s per capita income. An economist in 2007 by the name of Matilde Mas of the Universitat de Valéncia and Ivie, questioned if Spain would continue to marvel or if the nation’s growth would run out of steam.

Many experts examined Spain’s growth process and pinpointed some weaknesses this process had. Spain’s growth after joining the EU, was too reliant on the additional use of labour and did not have any concern for increasing productivity. Although this process may have helped Spain in the beginning when they first joined the EU, the reliance of additional labour will not be sustainable in the future.

Others argue that Spain’s criticism is not fair because certain caveats exist. Many experts seem to ignore how poor Spain was when they first entered the EU. Still present in Spain’s economy today are the high unemployment rates, the low percent of women in the labour force, the large presence of the primary sector, and the low level of labour qualification. One important source of growth that Spain had was the combination of physical capital and drastic improvements in labour quality. Many economists believe that Spain’s economic growth would be more productive, especially over the long run, if it could transform to having better instead of simply more employment. If Spain could accomplish this, their economic growth could become more intensive and less extensive.

http://www.eurointelligence.com/Article3.1018+M5fffb2fbd30.0.html

n 1986 Spain joined the European Union and immediately began to become a prime example of what a nation can accomplish with a steady continuous high growth performance. Before joining the union Spain’s per capita income was way below the average for the EU. However, shortly after joining the EU, the nation made a dramatic shift in their per capita income and climbed slightly above the EU’s per capita income. An economist in 2007 by the name of Matilde Mas of the Universitat de Valéncia and Ivie, questioned if Spain would continue to marvel or if the nation’s growth would run out of steam.

Many experts examined Spain’s growth process and pinpointed some weaknesses this process had. Spain’s growth after joining the EU, was too reliant on the additional use of labour and did not have any concern for increasing productivity. Although this process may have helped Spain in the beginning when they first joined the EU, the reliance of additional labour will not be sustainable in the future.

Others argue that Spain’s criticism is not fair because certain caveats exist. Many experts seem to ignore how poor Spain was when they first entered the EU. Still present in Spain’s economy today are the high unemployment rates, the low percent of women in the labour force, the large presence of the primary sector, and the low level of labour qualification. One important source of growth that Spain had was the combination of physical capital and drastic improvements in labour quality. Many economists believe that Spain’s economic growth would be more productive, especially over the long run, if it could transform to having better instead of simply more employment. If Spain could accomplish this, their economic growth could become more intensive and less extensive.

Spain's budget deficit

Spain mounting deficit is currently pushing the limits of the European Unions (EU) guide lines. In A statement released after the governments weekly cabinet meeting, it was announced that the governments deficit was provisionally estimated at 11.4%. under the rules of the EU, which Spain and other European contries must adhere to, a state budget has to be no larger then 3%. the EU has given Spain until the year 2013 to bring their deficit back under these guidelines. the main driving factor of Spain's current economic problems is the above average unemployment rate of 19.5% when compared to Europe's average of 10%. In fact, Spain has set the record for the highest unemployment rate in the region. In 2010 Spain began its term of presidency for the EU, further shining the spotlight of the countries current economic difficulties. Although Spain is currently facing major issues due to their economic budget deficit, Greece is also facing similar debt issues, having a budget deficit of 12.7% for the fiscal year. Spain's current economic difficulties are a direct result of the crumbling of the construction industry and housing market. In order for Spain to get its deficit back under the EU's guidelines, it will need to work directly with its regional and municipal governments. We will see what the future holds for Spain's budget deficit.

Source citation: http://www.marketwatch.com/story/spain-takes-aim-at-its-soaring-budget-deficit-2010-01-29?reflink=MW_news_stmp

Introduction of Spain's Economy

Hello my name is Mary and I am doing my country for Mr. Fleury's Macroeconomics class on Spain. Spain's civilization dates back to the stone ages. You may remember from humanities class that Spain is home to Altamira, were art from prehistoric humans has been preserved on cave walls.

Today Spain is a largely agricultural country producing the most olive oil in the world. Spain is also the largest producer of lemons, oranges, and strawberries in all of Europe. Spain's largest industries that are mostly concentrated in Madrid consist of, textiles and apparel, foods and beverages, metals and metal products, chemicals, ships, automobiles, machine tools, clay and refractory products, footwear, pharmaceuticals, and medical equipment.

Spain conducts most of their trade from Italy, Germany, France, and Great Britain. Although the country still has a major trade imbalance, the industry has grown significantly since the 1950's. Spain's currency is the Euro, and they are a democratic constitutional monarchy with a National Parliament (Cortes Generals). Spain's head of state is King Juan Carlos I and the country has a population of 44.6 million.