Some Thoughts on the Spanish Economy after Five Years of Crisis

47 Pages Posted: 4 Jan 2014

Date Written: January 3, 2014


This paper briefly describes some features of the situation of the Spanish economy after five years of crisis, a task which is easier now that this period can be analyzed from a certain perspective. The crisis prompted a substantial readjustment of the main Spanish macroeconomic aggregates, affecting the level and composition of GDP, employment and the balance sheet position of the institutional sectors. During this period some of the imbalances that built up during the upturn have been corrected and several key variables are currently at around the average European levels. All told, the legacy of the crisis, in terms of the magnitude of unemployment and of the still high levels of indebtedness, makes for a complex outlook and suggests that the recovery will be gradual and not free of uncertainty. This uncertainty mainly affects the functioning of the economy’s adjustment mechanisms, particularly those working through the channels of competitiveness and of private sector balance sheets. Despite the depth of the crisis in Spain, the progress made in the reforms on various fronts is, on balance, significant. From the perspective provided by the analysis of the crisis in this paper, supply-side policies will have to play a major role in the current phase of the cycle to enable the recovery to proceed firmly.

Keywords: Spanish economy, economic crisis, adjustment, rebalancing, internal devaluation,competitiveness, balance sheet position, indebtedness, reforms

JEL Classification: E60, E65, F32, G01, H12.

Suggested Citation

Ortega, Eloísa and Peñalosa, Juan, Some Thoughts on the Spanish Economy after Five Years of Crisis (January 3, 2014). Banco de Espana Occasional Paper No. 1304, Available at SSRN: or

Eloísa Ortega (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014

Juan Peñalosa

Banco de España ( email )

Alcala 50
Madrid 28014

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