The Spanish Crisis (2008-Present)

From 1997 to 2007, Spain’s gross domestic product grew about 40%, one of the highest rates in the European Union. Because of this economic growth, unemployment came down to an all-time low of 8%. Most of this growth came from the construction sector, which in late 2007 comprised 16% of GDP. Cheaper credit, brought on by the advent of the euro, meant that there was a higher demand for housing which would eventually create a real estate bubble. In 2008, amidst a global recession, the housing bubble burst. This had a snowball effect on the Spanish economy, creating a sharp reduction in the construction and real estate sectors as well as the banking sector. At the end of 2012, four years after the start of the crisis, unemployment in Spain was still above 25%. The effects of this crisis are so severe that many have called the generation of young Spaniards living through the crisis the “lost generation.” What happened? How did this happened? Could it have been avoided?

Start

Spain's Economic Rise High GDP Growth

From 1999 to 2007, Spain had one of the highest GDP growh rates in the Eurpoe. It's entry into the European Union gave way to strong economic growth.

Source: Eurostat / Original Data

Spain's Economic Rise Lowering of Unemployment

In this time, Spain went from having one of the highest unemplyment rates in the Eurozone to an umployment rate lower than Germany in 2007.

Source: Eurostat / Original Data

Spain's Economic Rise Low Public Debt

Through its economic growth, Spain was able to curve government deficit. In 2007, it had one of the highest government surpluses in the Eurozone; higher than France, Germany, or Italy.

Source: Eurostat / Original Data

Spain's Economic Rise The Construction Sector

Since Spain's adoption of the Euro in 1999, the composition of its economic sectors changed substantially. The Construction sector and the Non-market services sector grew at the expense of industry and agriculture. This overdependence on the growth of the construction sector would become one of the main factors behind the Economic Crisis.

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January, 1, 1999

January, 1, 1999
December, 31, 2007

Source: Instituto Nacional de Estadística / Original Data

Responses to The Crisis The Response Across Spain

The Start of The Crisis Rising Unemployment