1. Research question: What is the basic problem in Spain’s economy?
One of the core reasons is the selfmade banking crisis. The real estate sector became a big overkill which has been caused by the banking crisis. The construction industry has become a large-scale losses for banks and in the public sector unemployment has risen and housing prices have fallen. Spain also has a problem with competitiveness as there has not been success with any export and the unemployment rate has increased. The country is in a loop, and the correction is difficult.
If Spain would be different from the euro area, the German losses in economic growth would increase by 850 billion and credit losses into 266 billion by the year 2020. In comparison if Italy would be different from the euro area, Germany would lose 1 700 billion, and would have to give up 455 billion they are owed. Greece, Spain and Italy differenting from the euro area would take the euro into crisis and the global economy into a deep recession and 42 in the world biggest economy would lose a total of 17 200 billion euros.
It has been said that the euro would manage if Greek would differentiate, but not if Spain would do the same. Spain's economy is so large and the expulsion from the euro zone would have more severe consequences, also in a political way. It could even mean the euro zone rupturing on a larger scale. And if Spain falls, the Italian economy would likely follow. That could mean that the euro would remain valid as a currency further north in Europe for a smaller number of users. There is fundings available for saving Spain's economy, but after that there might not be enough to help any other countries anymore.
Country overview
Spain’s economy is the 12th largest economy in the world, 5th largest in the EU and 4th largest in the Eurozone. It is ranked as 44th in the ease of doing business rank. GDP is