Spain - Overview
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Power is highly decentralized; the autonomous communities have a high level of legislative, executive and fiscal autonomy (Basque country and Navarre, own taxes).
In 2013, the government continued introducing reforms to rebalance the state accounts and it was able to soften the austerity measures thanks to the EU's losening of its requirements in terms of deficit reduction (the goal was increased from 4.5% to 6.5% and Spain was given additional two years to reduce its budget under 3% by 2016). The country experienced an increase in competitiveness encouraged by the decreasing cost of workforce and investors became more confident, which resulted in lower interest rates on the sovereign debt. In late 2013, the government announced that it was closing down its assistance plan for banks since the last visit of the IMF inspectors came to the conclusion that the restructuring programme of the bank sector had had good results. To support this nascent economic recovery a number of reforms are due to be adopted, including and especially, of the pension system (abolishing indexation on inflation, revision of retirement age according to life expectancy), enterpreneuriship (standardisation of business creation rules and trade licensing, facilitating bureaucratic procedures and access to funding) and public spending (administrative reform). The debt has risen to 94% of the GDP and should reach nearly 99% of the GDP in 2014.
Spanish unemployment rate has fallen due to the decrease in active population and the creation of new temporary jobs, but still remains very high (25%). The crisis has had a negative impace on the living conditions generally.
The manufacturing industry is dominated by textiles, industrial food processing, iron and steel, naval machines and engineering. The new sectors such as relocation of the production of electronic components, information technology and telecommunications provide a high growth potential.
Tourism represents Spain's largest source of income and the country has become the number two tourist destination in the world, thereby stimulating export of goods and services. The tertiary sector contributes to two thirds of the GDP.
Foreign trade overview
The main trade partners are the countries of the European Union, France being the first destination of Spanish exports. France imports Spanish food products, cars, chemical and textile products. Spain also has good trade relations with the Maghreb countries.
In terms of FDI appeal, the country’s strengths include: cultural proximity to Latin America, with the presence of a number of Spanish multinational companies, boom in tourism, its highly efficient transport network and development of renewable energies. Spain aspires to become one of the world's key research actors. To this end, it has developed the "Malaga Valley" project, whose promoters are hoping to construct the largest European research and innovation center dedicated to information and communication technologies.