Spain's GDP increased by 3.9% in 2006, to 899,000 million euros, making it the seventh highest in the OECD. The structure of the Spanish economy is that o f a developed country, with the services sector being the main contributor to GDP, followed by industry. These two sectors represent 85% of Spain's GDP with agriculture's share today representing 3% of GDP, and declining sharply as a result of the country's intense economic growth (see Table 4).

Spain is a dynamic country, with consistently high economic growth rates, well above the average for other countries including the EU (see Chart 2).

The prospects are that Spain will have growth rates above the 3% threshold, in 2007: specifically 3.4% according to both OECD estimates and Spanish Government forecasts, once again exceeding the average for the EU.

Today Spain has a domestic market of 44 million people with a per capita income (ppp) of 28,809 as estimated by the FMI for the year 2007, and an additional injection of demand coming from the nearly 56 million tourists11 who visit the country every year. The close links with Latin America and North Africa and the Inflation in Spain has fallen steadily since the late 1980s. The average inflation rate for 1987 through 1992 was 5.8%. The rate of inflation was kept below 5% for the first time in 1993, and has been further reduced in subsequent years. Year 2006 ended with an annual rate of inflation of 2.4%, the lowest since 2003.

Also, since 1999 Spain, has engaged in an earnest effort to reduce the budget deficit, including a successful program of major privatizations and of containing public expenditure. Action taken by the Government has once again proved the flexibility of the Spanish economy and has resulted in an important reduction of the deficit with a surplus of 1.8% of GDP achieved in 2006.

Very noteworthy is the impressive reduction in official interest rates in Spain from 10% in 1993 to the current 3.50%.