MADRID, Dec. 7 (Xinhua) -- The Spanish economy has suffered from recession for much of 2009 but signs of recovery have been noticed in recent weeks.
Most EU countries except for the United Kingdom began to recover in the second half of this year. Spain, however, continued to report a decline in its economy.
The third quarter saw Spain's economy shrink by 0.3 percent, showing that the decline is slowing. A turnaround, however, was not expected to begin until the first few months of 2010 at the earliest.
Unemployment continues to be a major problem in Spain, which has the highest unemployment in the Euro Zone.
There were 3,868,946 people out of work in Spain at the end of November, an increase of more than 1,000,000 workers over the previous 12 months. According to the IMF's estimates, unemployment could reach almost 20 percent by 2010.
Spain's fiscal deficit was estimated to reach 10 percent of GDP by the end of the year. The current deficit fell by 50 percent in 2009, mainly through a decrease in internal demand.
Meanwhile, Spain in September saw its first decline in two years in the number of bad debts.
Greater job instability also led to a decline in consumption, which continues to fall. The third quarter, however, saw consumption shrink by just 0.1 percent, compared to a 1.5 percent decline in the second quarter.
Inflation fell to a record low 1.4 percent in July but has slowly been increasing since. Forecasts predict a moderate rate in the near future.
The Spanish government has taken measures in an attempt to soften the impact of the crisis.
The most visible effort is Plan E, which applied measures to support families and companies and also to safeguard or create around 400,000 jobs.
Measures to promote the service sector, renewable energy and high-tech industries were also implemented to formulate a new viable growth path.
2009 is coming to an end with the Spanish economy still in the grip of recession, although that hold is clearly loosening. There are factors that promote certain optimism for the coming months.
One is that the Spanish banking system appears to have weathered the storm well, although some small savings banks need to be reorganized because of problems with asset quality and liquidity.
A reorganization of Spain's banking system will lead to improved efficiency and move the sector more in line with a future economy.
The service sector also maintained itself reasonably well during the past 12 months and should be in a position to help compensate for the collapse of Spain's construction industry.
Spain is the second EU country after Germany that saw its exports decline the least during the economic downturn and is now well placed to improve its market share abroad.
Low credit costs and an available pool of labor means Spain's manufacturers are in a good position to expand quickly and relatively cheaply.
Domestic demand also looks set to recover thanks to low interest rates and government stimulus packages.
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