“Economic adjustment in Spain and waning doubts surrounding the break-up of the euro have shored up Spain’s attractiveness as an investment destination. It is once again a land of opportunities for starting and doing business. Spain has become more competitive, boasts an innovative business landscape and a highly qualified labour force.”
This is one of the main conclusions of the third report by the Business Council for Competitiveness (CEC, for its initials in Spanish) about the Spanish economy entitled “Spain: a land of opportunities”, which looks at the country’s economic adjustments and the structural reforms adopted that should improve the outlook considerably for the next few years. The report suggests that Spanish gross domestic product (GDP) will begin recovering in the fourth quarter of 2013 and estimates that the improvement in activity will have a positive effect on job creation as early as 2014, thanks also to the positive impact of the labour market reform.
The paper presented in Madrid today and prepared by CEC’s company experts and analysts, states that Spain already enjoys significant advantages in key areas of competitiveness and innovation that will make it a “success story” offering attractive opportunities for investment, particularly foreign investment. In fact, one of the country’s greatest strengths is its high percentage of skilled staff; its 32% tertiary education level is among Europe’s highest and ranks ahead of Germany and France, among others. This means that 38% of professionals working in Spain today are highly skilled, 8 percentage points above the European average. This makes Spain a knowledge-intensive country.
In addition to high levels of professional qualification, other indicators for Spain guarantee a propitious environment for starting and doing business: three-quarters of the country’s total turnover is generated by innovative companies; it boasts cutting-edge infrastructure and telecommunications networks; high levels of excellence in scientific output and a key geostrategic location as a springboard for access to markets with strong growth potential, such as Latin America. Finally, Spain’s productivity growth is accelerating, and should double the euro area average growth in the next two years and outstrip Germany’s in 2014.
All this, together with the renewed confidence in the Spanish economy and the increasing weight of internationally focused fast-growing and innovative sectors within its economy, guarantees that Spain will remain at the economic forefront going forward.
Return to growth
In the report, CEC’s experts expect GDP momentum to perform differently in 2013 compared to 2012, gradually improving throughout the year and showing positive growth rates in the fourth quarter. Net trade should be the main driver, with forecasts pointing to acceleration in 2013-2014. On top of that, domestic demand should have an increasingly less negative impact on economic growth as most of the adjustments being made are ending, especially those affecting residential real estate investment, corporate indebtedness and public sector debt. In fact, most components of internal demand should post growth in 2014.
Moreover, with the economy expected to improve and labour reforms to have a positive impact, the report suggests employment will rise and the unemployment rate will fall slightly, especially in the second half of 2014. The experts also conclude that Spain will be able to create jobs in the medium term, estimating that there will be a million more net jobs by the end of 2020 than in 2010, mostly involving skilled workers.
Lastly, the CEC’s third report on the Spanish economy contains an extensive chapter analysing the sectors of activity in which Spain is more competitive and that are currently the most dynamic, characterised as being innovation intensive, geared towards exports and having high output levels. It also looks at the strong growth of service exports, led by tourism and the boom of other tradable services, and at growing business innovation environment, resulting in major scientific discoveries and enabling Spanish companies to break ground in sectors of the new economy.
Specifically, it notes that Spain is achieving strong dynamism and European leadership in activities related to the automotive, biotech, ICT, agri-food, aerospace and machine tool industries. These economic sectors do have a turnover around35% of Spanish GDP and export around 42% of the country’s overall exports. They have generated more than two million jobs and play a key role in enabling Spain’s economic recovery to gain momentum.