Spain Economics

Strengths
Spain's labor force is well qualified and relatively low labor costs are still an advantage, though less so than before. Improvements in transportation and communications will continue to attract foreign investment. Potential for domestic growth is Spain's major asset.

Weaknesses
The massive foreign penetration of the Spanish economy and absence of Spanish multinationals pose long-term problems. Low investment in research and development; a rigid labor market (which trade unions are reluctant to reform); a concentration in declining industries; and low productivity – notably in agriculture – are major weaknesses. Spain's percentage of economically active people is lower than in the rest of the EU.

Profile
Since joining the EC in 1986, the government's main economic goal has been real convergence with the major European economies. This seemed possible in the period 1986–1991, when Spain enjoyed the highest investment-led output growth in the OECD. By 1991 GDP per capita stood at almost 80% of the EC average. In 1992, however, Spain plunged into recession along with its major trading partners. In 1992–1993, three devaluations of the peseta, by a total of 18%, just managed to keep it in the ERM. 
    Whatever happens to the EU, González remains committed to convergence, and is pinning his hopes on wage moderation, labor market reforms and increased productivity.