Introduction:
Spain's powerful world empire of the 16th and 17th centuries ultimately yielded command of the seas to England. Subsequent failure to embrace the mercantile and industrial revolutions caused the country to fall behind Britain, France, and Germany in economic and political power. Spain remained neutral in World Wars I and II, but suffered through a devastating civil war (1936-39). A peaceful transition to democracy following the death of dictator Francisco FRANCO in 1975, and rapid economic modernization (Spain joined the EU in 1986), have given Spain one of the most dynamic economies in Europe and made it a global champion of freedom. Continuing challenges include Basque Fatherland and Liberty (ETA) terrorism and relatively high unemployment.

Location: Southwestern Europe, bordering the Bay of Biscay, Mediterranean Sea, North Atlantic Ocean, and Pyrenees Mountains, southwest of France

Population: 40,397,842 (July 2006 est.)

Languages: Castilian Spanish 74%, Catalan 17%, Galician 7%, Basque 2%; note - Castilian is the official language nationwide; the other languages are official regionally

Country name: conventional long form: Kingdom of Spain
conventional short form: Spain
local long form: Reino de Espana
local short form: Espana

Capital: name: Madrid
geographic coordinates: 40 24 N, 3 41 W
time difference: UTC+1 (6 hours ahead of Washington, DC during Standard Time)
daylight saving time: +1hr, begins l

Economy - overview:
The Spanish economy boomed from 1986 to 1990, averaging 5% annual growth. After a European-wide recession in the early 1990s, the Spanish economy resumed moderate growth starting in 1994. Spain's mixed capitalist economy supports a GDP that on a per capita basis is 80% that of the four leading West European economies. The center-right government of former President AZNAR successfully worked to gain admission to the first group of countries launching the European single currency (the euro) on 1 January 1999. The AZNAR administration continued to advocate liberalization, privatization, and deregulation of the economy and introduced some tax reforms to that end. Unemployment fell steadily under the AZNAR administration but remains high at 8.7%. Growth averaging 3% annually during 2003-06 was satisfactory given the background of a faltering European economy. The Socialist president, RODRIGUEZ ZAPATERO, has made mixed progress in carrying out key structural reforms, which need to be accelerated and deepened to sustain Spain's strong economic growth. Despite the economy's relative solid footing significant downside risks remain, including Spain's continued loss of competitiveness, the potential for a housing market collapse, the country's changing demographic profile and a decline in EU structural funds.