• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Compare and contrast the economic performance of Spain with Italy.

Extracts from this document...


Data question: Spain and Italy 1.) Compare and contrast the economic performance of Spain with Italy The graphs show a similar trend in the economic growth rate of Spain and Italy during the first half of the decade (1990-1995). In 1990, Spain's economic growth rate was relatively high, at around 3.7% and in comparison to this, Italy's growth rate was lower as it was just above 2%. Both Italy and Spain faced short-term recession for the first year of the decade but they also recovered and the growth rate of both countries rose during 1991-92. For the year after this, Spain and Italy experienced deep recession but fortunately the growth rate rose during 1993-95. There is a big difference in the growth rate of the two countries after 1995. Italy's economic growth rate rises dramatically and peaks in 1996 at 9%. During this time, Spain's growth rate decreases slightly to around 2.4%. From 1996-97 Italy again undergoes deep recession, following a similar pattern as earlier in the decade and this time, Spain's economic growth rate rises. By the year 2000, Italy's growth rate is back where it was in 1990, at around 2%, whereas Spain's growth rate ends up at around 3.4%, which is a little lower compared to the beginning of the decade. In both Spain and Italy, inflation decreased overall during the decade, which meant that the prices kept falling annually. ...read more.


During the 1990's Italy had adopted policies to reduce its inflation rate and curb it government spending deficit. These policies have tended to have a deflationary impact because from 1995-97, inflation deceased by 4%. In recent years, Spain has had an economic growth rate that is among the highest in the EU. At the same time, the country has succeeded in reducing unemployment and balancing public finances. This has led to better living standards. In spite of the fact that approximately two million new jobs were created between 1996 and 2000, the official unemployment rate remains high (approximately 13% of the work force). Average income in Spain is only 80% of that of the rest of the EU, therefore the country still has some way to go. The inflation rate of 3% in 2000 was above the EU average. 2.) What problems may these countries face in the future and how would they impact on their economic performance? The main economic challenges facing Italy are keeping the government deficit under control, implementing a plan to reduce the high level of government debt and addressing unemployment. Since Italy's economy barely rose in the beginning, growth will fall short of the government's target of 1.3% for all of 2002. Instead, real GDP will probably edge up by 0.5%. Despite slow economic growth, Italian inflation is creeping up. ...read more.


Actions taken by the ECB may not reflect the optimal policy for the Spanish economy. Supporting a fixed exchange rate with its main trading partners may pose particular problems for Spain in the near future. Although Spain currently enjoys a very high growth rate, the low interest rate provides little incentive for saving and is driving investment far above net domestic savings. The negative current account has worsened with the growth in GDP, as Spain imports more and foreign demand has still not fully revived exports. Foreign capital funds an increasing portion of investment. These problems are even more complex given the uneven growth patterns in the Euro currency zone. Spain needs to look towards ensuring further steep reductions in unemployment from its striking high levels and achieving a broader distribution of the benefits of economic growth. A deepening of reforms would also engender a more rapid convergence of incomes to the levels of other European Union countries, much greater resilience in the face of shocks to the economy, and a more secure future for coming generations. Italy, on the other hand, is not expected to have a growth rate as high as Spain in the next few years and it is believed that the effect of global economic slowdown on Italy has been growing. It had originally been forecasted that the economy would grow to 2.9% in the next few years and this was later trimmed to 2.5%. Thinking that the figure was too optimistic, it is now believed to have gone down to 2% economic growth. Rashminder Ryatt 20/09/02 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Retailing In India - A Government Policy Perspective

    summarize the effect that of foreign direct investment in developing economies across the globe. 5.1 Global Trends The process of globalization is not uniform across all industries, and there are large differences in the extent to which developed and developing countries have been integrated into a single global market.

  2. Compare and contrast the approaches to economic reform adopted in China and Russia

    On the contrary Russia's approach to agricultural reform has not been rosy. The state decided to give out "collective and state farmland equally per capita [...] in the form of paper shares or certificates"35. According to Macours and Swinnen 50% of the farm enterprises have reported that no real changes have happened in the Russian farming system36.

  1. Exchange rate.

    around the world and their main job is to make money by trying to predict the movements of currencies. They buy when they think the value of currency is going to rise and sell when they think it is going to fall.

  2. This report will establish the opportunities and threats presented to Sony by the EU ...

    because machines can now take their place once Sony has a set production system for this. Nevertheless major cost will go down once Sony standardise because they are producing on set of products for pan-Europe. However they are also disadvantages in producing one set of products for all the member countries.

  1. Free essay

    From an economic perspective should my council do more to recycle a greater proportion ...

    Overall, 60% less energy is used when recycled. This table shows how much energy is saved when recycling these materials rather than manufacturing these materials from raw materials. This means less greenhouse gases are given off during the production of a material by recycling. This means benefits the environment too.

  2. What effects have interest rates had on economic indicators like GDP, Inflation ,Unemployment and ...

    Essentially, the way that interest rates affect the economy is through the forces of aggregate supply and aggregate demand in the economy. When the MPC sets the interest rates they are controlling the demand in the economy which affects employment, inflation, money flow, the separate markets like housing markets, exchange

  1. UK Membership of the European Monetary Union.

    - Britain's rates of unemployment, public sector spending and taxation levels are markedly lower than most euro countries. - Britain's high overseas investment levels are testimony to the economic ties, which she enjoys with the world beyond Europe. - High levels of pension fund assets mean that Britain is less

  2. Overview of Intercontinental Hotels Group

    On the economical sense, the determination of the products and services offered by InterContinental Hotels and Resorts will be mainly based on the income elasticity of demand, which would be based on the income level and the corresponding spending level of consumers.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work