Spain votes as economy wobbles
Voters are going to the polls in Spain on Sunday, in an election overshadowed by the crisis in Catalonia and the rise of the right-wing Vox party.
But Spain is now also facing an uncertain economic outlook, with slowing growth and unemployment that is the second-highest in the EU, despite having come down from earlier highs.
Although Spain did bounce back quite well from the global financial crisis, it took a while to get started. The economy either contracted or just about failed to grow for five consecutive years, starting from 2009.
Once the recovery did get under way, however, Spain managed several years of growth in the range of 2.5% to 3%. Not stellar, but perfectly respectable.
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Unemployment has come down a long way from its peak, which was more than 26% for the adult population and almost 56% among young people.
The figures are still high. On both those measures, it is the second-worst in the EU after Greece. Still, the progress is very apparent.
Now, however, the outlook is somewhat cloudier. For next year, the International Monetary Fund forecasts growth of less than 2% for the first time since 2014.
The political situation in Catalonia is a factor, as tensions continue between local separatists and the central government in Madrid.
The region accounts for 19% of the Spanish economy. It is the largest regional economy in the country (though only just ahead of Madrid).
After growing more quickly than the national average in 2016 and 2017, Catalonia slipped behind last year and probably will this year too, according to forecasts from economists at the bank BBVA.
Spain has also been affected by the global economic slowdown.
True, it is not as exposed as Germany, which as a big exporter of machinery and vehicles is especially vulnerable to the disruption of international trade that has followed from the more confrontational approach taken by US President Donald Trump’s administration.
But tourism has been affected by weaker demand from European visitors, while some Spanish regions, particularly in the north of the country, have seen export performance weaken.
That said, Spain does not appear to be in imminent danger of suffering a recession, though the gloomier outlook does raise the spectre of the crisis.
Economy Minister Nadia Calviño said in a BBC interview that the pattern of growth now is more sustainable than in the past.
The crisis followed a boom in the construction industry and a surge in lending by banks, which were subsequently bailed out with the help of a eurozone loan.
Ms Calviño said construction now accounts for a much smaller share of employment than it did then and families and companies have “deleveraged”: that is, they have lower debts.
However, the government’s debt has more than doubled since before the crisis and a sharp economic slowdown would almost certainly force it to borrow more.