Spain in crisis


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Spain in crisis

  1. 1. The economic crisis in Spain Montserrat Torres. Current Affairs. Universität Konstanz.
  2. 2. <ul><li>Summary </li></ul><ul><li>Causes </li></ul><ul><li>Impact </li></ul><ul><li>Description </li></ul><ul><li>9 reason why Spain is a Dead Economy Walking </li></ul><ul><li>Duration </li></ul><ul><li>Questions </li></ul>
  3. 3. Why has it come so far? There are two main causes : - The coincidence of a financial crisis caused by global fall U.S. stock market - The collapse of the building business
  4. 4. Economic crisis or accumulation of other little crisis? To the economic crisis we should add: - Credit or financial crisis - Mortgage Crisis - Crisis of confidence in markets - Global Food Crisis
  5. 5. Greece vs Spain <ul><li>The economy of Spain is more than four times the size of the economy of Greece! </li></ul><ul><li>Spain accounts for 11.5% of eurozone GPD while Greece only accounts for approximately 2.5% ! </li></ul><ul><li>Spain is the 4th largest economy in the 16 nation eurozone and it is the 10th largest economy in the world !! </li></ul><ul><li>Analysts believe that if Spain defaults it would ultimately lead to the breakup of the eurozone. </li></ul>
  6. 6. Greece vs Spain <ul><li>Who is going to save Spain? </li></ul><ul><li>- There are rumors that EU officials have begun work on a bailout package for Spain which is likely to run into the HUNDREDS OF BILLIONS OF DOLLARS! </li></ul><ul><li>“ If Greece goes under, that’s a problem for the eurozone. If Spain goes under, it’s a disaster” ( Forum in Davos, Switzerland) </li></ul>
  7. 7. What kind of impact does it have? - Destruction of jobs: 3.128.900 unemployed - Rise of morosity from 3.3% to 5.4% - GDP fall of 3.8% to 0.9% - ICC fall of 72.3% to 48.9% (International Chamber of Commerce) - Drop in the number of members of the Social Security
  8. 8. 9 Reasons why Spain is a Dead Economy Walking <ul><li>- Spain now has the highest unemployment rate in the entire European Union. More than 20% of working age Spaniards are unemployed. </li></ul><ul><li>Consequence: if people aren’t working they can’t pay taxes and they can’t provide for their families. </li></ul>
  9. 9. Spain in crisis <ul><li>- In an effort to stimulate the economy, Spain’s socialist government has been spending the stunning 11,4% of the GDP (Gross Domestic Product). </li></ul><ul><li>-That is completely unsustainable by any definition!! </li></ul>
  10. 10. Spain in crisis <ul><li>- The total of all public and private debt in Spain has now reached 270% of GDP, this is amazing ! </li></ul>
  11. 11. Spain in crisis <ul><li>The Spanish government has accumulated so much debt that rating agencies have lowered long-term credit rating. </li></ul><ul><li>- These downgrades are making it much more expensive for Spain to finance its debt. </li></ul>
  12. 12. Spain in crisis <ul><li>There are 1.6 million unsold properties in Spain. </li></ul><ul><li>That is six times the level per capita in the United States!!! </li></ul><ul><li>(considering how bad the U.S real state market is, that statistic is VERY alarming) </li></ul>
  13. 13. Spain in crisis <ul><li>- the new “green economy” in Spain has been a total FLOP. </li></ul><ul><li>That’s why the energy prices in Spain have skyrocketed and the nation has actually lost more than two jobs for every job that it has created. </li></ul>
  14. 14. Spain in crisis <ul><li>- Spain’s national debt is so big that they now caught in a debt spiral where anything they do will harm the economy. </li></ul><ul><li>- The truth is that the Spanish government is caught in a “no win” situation. </li></ul>
  15. 15. Spain in crisis <ul><li>- the IMF (International Monetary Fund) says that the Spanish economy is going nowhere fast. </li></ul><ul><li>- they state there will be NO positive GDP growth in Spain until 2011 (and it will be only of 1% ) </li></ul>
  16. 16. Spain in crisis <ul><li>- The Spanish population has gotten used to socialist handouts and they are not going to accept public sector pays cuts. </li></ul><ul><li>- Spain’s two main unions are calling for a major one day general strike and early elections may be forced. </li></ul>
  17. 17. How long will it last? There are doubts about its permanence. Depend on the measures taken by: The European Central Bank The U.S. Federal Reserve The national government The consumers’ confidence appears to be a key factor in the recovery of markets
  18. 18. Questions or comments? <ul><li>How bad is the global crisis in your respective countries? </li></ul>