With the end of an extraordinary growth spurt a recession in Spain is inevitable. But to what extent will it affect Spain and its exchange traded fund (ETF)?

It seemed like it was just yesterday that Spain’s improvements in living standards and employment knew no bounds. In the last decade, Spain’s economy grew at an average annual rate of 3.6% and unemployment dropped from 24% to 8%, according to The Economist.

Spain was credited with the creation of one in every three new jobs in the euro zone. In 2006, Spain became the world’s ninth-largest economy measured at market exchange rates and twelfth-largest in purchasing-power parity (PPP).

But investment is slumping and unemployment in August was 11.3%. The economy had its slowest growth rate since 1993 with an increase of just 0.1% between the first and second quarters.

As the European Central Bank raised interests last year, it marked the burst of the Spanish housing bubble. Spain also saw the effects of high oil prices, decreasing disposable income and an inflation rate at 5.3% in July.

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