MADRID — Lured by the promise of wealth in a booming economy, immigrants from North Africa, Latin America and other regions flocked to Spain in the last decade, quickly becoming Exhibit A in the Mediterranean nation's remarkable success story.
But the surging economy -- which relied, to its eventual peril, largely on construction, tourism and service industries -- has crashed.
In a real estate-fueled boom-and-bust cycle that mirrors remarkably the one in the U.S., Spain today is in the throes of a dramatic downturn. Many of the first to lose their jobs and default on loans are those same immigrants, many of whom eschewed a move to the United States to try their luck in Spain.
Of nearly 460,000 who lost their jobs in the last year, about 60% were immigrants, official data show. The unemployment rate is rising three times faster among immigrants than it is for the general population.
Similar economic contraction is racking communities throughout Europe, with Spain -- along with the region's other star performer, Ireland -- merely the most acute examples. Projections for growth are being slashed across the board and the word "recession" is in the air. Germany, France and Italy all posted negative growth in the second trimester of 2008.
Continued slowdown in Europe could spell more trouble for the U.S., which has benefited recently from strong foreign demand for exports. As Spain, Ireland and other European economies have begun to slump, that demand is expected to falter.
This week, the Spanish government released figures showing that 103,000 people joined the unemployment rolls in August, a 4.3% increase that brought the nation's total unemployed to 2.53 million, Bloomberg News reported. At the same time, construction, which added more than a million jobs over the last 10 years, continued to slump.
"The economic situation is worse than we all predicted," Spanish Economy Minister Pedro Solbes told El Pais newspaper recently. "We thought it would happen slowly but instead it has hit fast."
With unemployment among all workers at its highest level in 10 years, growth has slowed to its worst pace in 15 years. In the construction sector, where the international credit crunch finally quashed runaway building and rampant speculation, profits were reported to have fallen by 87%. Forecasters warn that major banks may be headed for trouble as the number of borrowers who default or are in arrears has tripled.
