Foreign direct investment(FDI) hit record highs in Spain in 2018, both in gross terms and when disinvestments are discounted. According to Industry Ministry data, gross foreign investments reached over 48 billion euros last year, a 70% increase on the previous year. Net foreign investment – which is more important as it reflects entry and exit flows – amounted to 39.746 billion euros, an increase of more than 153% over 2017. You have to go back to before the peak of the housing bubble to encounter similar levels of FDI in Spain.
According to the Ministry of Economy, the increases in FDI result from Spain´s continued above Eurozone average economic growth. The figures do not include financial investment, but rather deal with direct investment aimed at taking control of companies, opening factories, acquiring property assets or creating employment. In short they are long term projects linked to expectations of economic growth and so less volatile than purely speculative investments.
At the same time, the figures for Catalonia continued to decline. FDI in Catalonia in 2018 fell 12%. Between 2016 and 2018 it has fallen from gross investment of 8.273 billion euros to only 2.985 billion. In the midst of the political uncertainty provoked by the separatist movement, Catalonia´s share of total FDI in Spain has fallen from 31% to 6.4% in only three years. According to experts, the transfer of company headquarters out of Catalonia has contributed to the deterioration. By contrast, in the same period Madrid´s share of total FDI in Spain has expanded from 44% to 85%.
These figures can be very volatile from year to year. A single major investment can distort the data, especially in smaller regions. There can also be significant corrections in subsequent years because companies delay in reporting investments. However, the underlying trend are clear: in the competition for FDI, Madrid is winning and Catalonia losing.