Pain in Spain - on the brink of depression

Friday, September 25, 2009
Print RSS Tweet This! Save this entry to my Favorites

In our introductory AS macroeconomics we have discussed the differences between a cyclical recession and a depression. Much depends on the scale of the contraction in real national output from peak to trough of the cycle. This article from the Telegraph looks at a dire outlook for the Spanish economy which - not long ago - was one of the fastest growing countries in the European Union with a rising relative per capita income.

Quoting a report from Madrid research group RR de Acuña & Asociados, the peak to trough loss of GDP is likely to be more than 11%. “The group said Spain’s unemployment will peak at around 25pc, comparable to the worst chapter of the Great Depression......The construction sector will shrink from 18pc of GDP at the peak of the boom to around 5pc, making it unlikely that there will be any significant recovery before 2012. Even then growth will be “slow, weak, and fragile”.

A huge rise in the Spanish government’s budget deficit has left them little wriggle room for a fresh fiscal stimulus.

Spain and Ireland are frequently quoted as two EU countries whose property bubbles have been well and truly smashed with huge macroeconomic consequences. The slump in property represents a very large internal demand-side shock for a country heavily dependent on construction and also tourism for value-added measures of GDP.

Rate this article:   

Print RSS Tweet This!


ECONOMICS TEACHER RESOURCE NEWSLETTER

Join over 4,000 other Economics Teachers in the UK and around the world who receive the tutor2u Economics Resource Email newsletter. Get special offers, first news of latest resources, teaching ideas, conferences and workshops.

*  Your Email Address:
*  Preferred Format:
    AS/A2 Economics Board:
    GCSE Economics Board:
*  Country:
    Full Name:
    Job / Position:
    Postcode:
    School / College:
    Town / City:
*  Enter the security code shown:



Recent Threads on the Economics Teacher Discussion Forums:
Posts in: General Economics Teaching

Video Case-study - lunchtime prices slashed
Long Exam Example to Use for Revision Please?
Good hotel in London for school trip
Competitive Markets
Diminishing Returns
Complementary goods - HELP Please!
URgent Help Needed
Equilibrium concept
The price of life
Extended Project Qualification





Comments

Name:

Email:

Location:

URL:

Smileys

Remember my personal information

Notify me of follow-up comments?

Submit the word you see below:


Most Popular Topic Tags on the Economics Blog

recession, demand, economics, price, unemployment, prices, inflation, investment, costs, profit, downturn, supply, trade, debt, employment, confidence, euro, gdp, competition, capacity, risk, production, china, oil, incentives, exports, expectations, housing, pay, manufacturing, sterling, food, profits, property, mortgage, tutor2u, globalisation, banks, revision, slowdown, borrowing, usa, retailers, emissions, deflation, airlines, innovation, dollar, supermarkets, entrepreneur, efficiency, monopsony, elasticity, aqa, welfare, consumption, economist, productivity, keynes, saving, google, wealth, opec, depression, moodle, depreciation, jobs, competitiveness, credit crunch, economic cycle, cars, tim harford, externalities, stocks, infrastructure, environmental, strategy, carbon, vle, monopoly, subsidy, evaluation, eu, management, losses, protectionism, inequality, spare capacity, environment, poverty, bank of england, budget deficit, construction, behavioural, wages, macroeconomics, carbon trading, steel, commodities, output gap, skills, japan, oligopoly, imports, currencies, bbc, stagflation, contestable, agflation, cpi, farming, newsnight, choices, regulation, survey, taxes, government failure, itunes, minimum wage, lse, climate change, paul mason, population, intervention, keynes society, aviation, amazon, fiscal stimulus, single market, pricing, dan ariely, cartel, nationalisation, pollution, eton college, interest rates, shareholder, london, rationality, redundancies, market failure, rpi, mpc, shipping, behavioural economics, germany, robert peston, india, rsa, reputation, currency, quantitative easing, facebook, income elasticity, current account, stakeholders, brazil, coffee, savings, microsoft, monetary policy, crowding out, barriers to entry, collapse, multiplier effect, suppliers, economies of scale, price discrimination, uk economy, development, quiz, apple, surplus, taxation, labour market, tesco, free, scrappage, behaviour, tragedy of the commons, opportunity cost, open source, vat, smoking, cost of living, poverty trap, merger, growth, speculation, edinburgh, discrimination, ownership, cost benefit analysis, northern rock, global, ireland, supply chain, oecd, shareholders, scarcity, balance of payments, petrol, liquidity, duopoly, etonomics, iphone, trade deficit, starbucks, happiness, budget, human capital, subsidies, capital, immigration, eurozone, takeover, ecb, paradox of thrift, exploitation, advertising, wiki, public sector, utility, wants, labour force survey, peter day, tax, brand, blog, poland, iceland, foreign exchange, recovery, indirect tax, european union, robert frank, roger bootle, ocr economics, heathrow, hbos, hotels, freight, creative destruction, federal reserve, kaletsky, price war, information failure, spain, crude oil,
All tags

Login to the tutor2u Moodle VLE

Get a daily email update of new resources on the Economics Blog

Discussion forums for Economics teachers

Follow tutor2u on Twitter

 Jim  | Geoff  | Others

Latest entries

Categories

Monthly Archives

Syndicate