Spain

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Spain, officially the Kingdom of Spain, is located in Southwestern Europe, bordering the Mediterranean Sea, North Atlantic Ocean, Bay of Biscay, and Pyrenees Mountains.

In 1999 Spain joined the European Monetary Union (EMU) and adopted the euro in place of its former currency, the peseta.

Economy

Spain has the fourth largest economy in the euro zone and the 13th largest in the world.

The Spanish economy is highly dependent on its services and industry sector. Germany and France are Spain’s largest import and export partners.

In late 2007 a significant decline in consumer spending and an oversupply in the housing market took its toll on the construction industry. After almost 15 years of positive GDP growth, Spain officially entered into a recession in Q2 2008.

The government tried to revive the economy through stimulus spending, extended unemployment benefits, and loan guarantees. Unfortunately, the efforts only resulted to a government budget deficit more than three times the size of the euro zone’s limit. It also didn’t prevent the unemployment rate from rocketing above 20%. Spain soon became vulnerable to debt contagion from other financially troubled euro zone economies.

Meanwhile, the Spanish banks’ high exposure to the collapsed real estate market also took its toll on Spain’s growth prospects. The government restructured the savings bank sector and provided capital to institutions, but in Q2 2012 the Spanish government was left with no choice but to formally ask the European Union for bailout money for the banking sector.

Financial Leaders

Head of State: King Juan Carlos I

President of the Government: Mariano Rajoy

Minister of Economy and Competitiveness: Luis de Guindos

Minister of Finance and Public Administration: Cristobal Montoro

Bank of Spain Governor: Luis Maria Linde

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