Beginning in the early 1600s Spain began to decline from its prior position of wealth during the 1500s.
There were many factors that contributed to the decline of Spain. The output of precious metals from the New World dropped drastically and contributed to Spain’s loss of wealth.
Another issue that arose causing more declines in Spain was that many revolts took place in Spanish territories. The Spanish province of Catalonia was one of the rebellious areas and actually broke free from Spain. The Portuguese, who were under Spanish rule, also rebelled and eventually gained their independence from Spain in 1668. Sicily and Naples also revolted.
King Philip III, who was a meek sort of fellow, gave the Duke of Lerma authority to make political decisions within Spain that also resulted in more decline of Spain. In 1609 the Duke ordered all of the Moriscos, who were law abiding, productive Spanish residents of Muslim decent, to get out of Spain because they had connections with Spanish enemies such as France and Muslims. This took 400,000 people out of Spain’s population within 3 days and hurt Spain’s economy terribly because of the lack of workers and consumers.
Spain was also involved in wars that sucked up funds that could have been used more productively elsewhere.
A few other incidents brought about more decline of Spanish wealth and economy. With such an extensive list of faults it’s no wonder why Spain ended up in poor economic and political situations.