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.
Charity agencies in Madrid, which note a rise in the hungry at soup kitchens, have begun to sketch what they call the new face of the Spanish poor: an immigrant who had worked in the construction industry, was laid off and can't find sustained employment in a shrinking market.
"Those with mortgages are the ones who are really hurting," said German Cubas, a Peruvian dentist now working as a waiter in Madrid at the Inti de Oro Peruvian restaurant.
With consumer spending down, so are his tips -- and he is struggling to make ends meet.
Of course, immigrants are not the only ones suffering.
At Madrid's downtown Monte de Piedad, a 12th century institution where the poor can obtain low-interest loans, the native-born were well represented among those filling the plastic chairs in a crowded waiting hall the other day. Pawnshop proprietors say they're seeing more upper-class customers.
Jose Luis Valdivieso, a professional driver in Madrid, benefited from the boom but now sees the bust destroying his daughter's family. Like so many Spaniards, Valdivieso bought an apartment in 2000 and was able to sell it a couple of years later at more than double the price. He repeated the deal, acquiring a much larger place after profiting, again, on the sale of the earlier property.
Then came the crash. He has had to watch as his daughter, a more recent homeowner, found herself at a devastating disadvantage.
She purchased an expensive apartment, its price inflated by the real estate bubble, in one of the so-so southern neighborhoods of Madrid, availing herself of the cheap loans offered at the time. But interest rates shot up and now she can barely make payments, Valdivieso said.
Meanwhile, the collapse of the construction business, which had accounted for 18% of Spain's gross domestic product, has begun to spill over into other areas of the economy.
Consumer spending is down, and other sectors are reporting losses, including general commerce, tourism and transportation.
The seeds of the crisis, as in the United States, were sowed during the flush years, when money was invested in the construction of seemingly endless housing tracts, hotels and other buildings, instead of in more sustainable areas such as technology or research and development.
Some economists were saying last year that Spain was long overdue for a recession.
Politically, the Socialist government of Jose Luis Rodriguez Zapatero, reelected to a second four-year term in March, has been widely criticized for moving too slowly to confront the crisis.