Financial Crisis of 2008 in Spain
Introduction
The 2008 financial crisis in Spain happened during the world’s financial crisis of 2008. The 2008 financial crisis impact still hurts the central government of Spain today. Before the Great Depression, Spain was the largest economy in the European Union region. Since the 2008 world financial crisis, the unemployment rates in Spain have increased due to economic depressions in the country (Barrell and Davis, 2008, p. 5). The aim of this essay is exploring how the 2008 financial crisis affects Spain.
Economic effects
During the 1990s and the early 2000s, there was rapid growth in the economy at Spain; making the country the 5th largest European Union economy. The rapid growth in economy encouraged a boom in the property. However, the 2008 financial crisis adversely affected Spain’s economy. The Spanish property collapsed, and this contributed to a great depression that has been felt by the country since then. Since the occurrence of the 2008 financial crisis, the Gross Domestic product of Spain fall sharply due to exports overvaluation, EU recessions, banking crisis, collapsed in the property market, and reduction of government expenditures (Reinhart and Rogoff, 2009, p. 466). The decreased in GDP contributed to the increase in inflation where the price for commodities shoots steadily.
Social effects
There are significant social impacts on Spain that have been contributed by the Great Depression of 2008, where the impacts on the employment market caused by the financial crisis in the economic cycle have been more profound in Spain than in the other EU countries. There has been a massive decline in employment and a marked increase in the unemployment rates in Spain since 2008, marking 23% unemployment rate which is the highest among the EU member nations (Barrell and Davis, 2008, p. 10). Losses of jobs have been manifested across all age groups of the Spain population with the youths being the most affected.
Trends that Explain Current Situation of the Spanish Economy