The euro is having a bit of a PR crisis in Spain, where most Spaniards believe it has damaged their economy and, in turn, its exchange traded fund (ETF). On the other hand, not many people seem to be in favor of ditching it, either.

Jason Webb for Reuters explains that Spain has issues that need to be dealt with as the country faces a steep slowdown with strong scepticism toward the euro among the country’s younger crowd. The currency was introduced in 1999.

Following a jump in unemployment and plummeting economic growth to almost zero in the second quarter this year, Spain has been unable to counter its economic slowdown by an export boost delivered by devaluation or by deciding to cut interest rates on its own. Spain’s current account deficit has also grown to about 10% of its GDP.

Rather than using the euro as an opportunity to strengthen its industry upon its introduction, Spain started on a consumption and construction binge. This allowed the inflation rate to outgrow the rest of the euro zone.

Spain will now have to fight through real wage restraint, sort out their excess debt problem, and improve productivity in the business sector. However, Spanish growth is expected to slow in the future as well. Diana Choyleva of Lombard Street Research in London sees growth over the next five years to be less than half the growth of the previous five years.

As Spain looks to address the economic issues it currently faces, some ETFs that are likely to be affected include:

• iShares MSCI Spain Index (EWP), is down 20.1% year-to-date
• CurrencyShares Euro Trust (FXE), is up 3.5% year-to-date

Tags | Europe, EWP, FXE, Spain