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Spain's economy
Spain's economy
May 3rd 2007
From The Economist print edition
FOR a decade or more, the Spanish economic galleon has been blessed with a following wind and full sails. It has outrun the OECD average in nine of the past ten years and the euro-area standard for all of the past dozen. A country that in 1994 had an unemployment rate of almost one in five has provided work for lots of immigrants as well as many more of its natives. Almost two-fifths of net new jobs in the euro zone since the creation of the single currency have been Spanish ones. Only a few years ago, the thought of Spanish fashion chains, banks and construction companies swashbuckling their way around the globe in search of booty would have seemed preposterous. Now, as our special report describes, they are doing precisely that. Yet in home waters at least, more difficult conditions are ahead—and Spain's weaknesses are about to be exposed.
For some time two hazards have been visible. One is a giddying rise in house prices, which have climbed by 180% in the past decade, more than doubling in real terms. The market has so far been steadying—property-price inflation fell to 7.2% in the year to the first quarter—but the recent collapse of a property company's share price shows that the stockmarket, at least, is worried.…
