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Invest In The Economic Revival Of Spain

220px-PalaciorealycatedraldelaalmudenaTo make an investment when the economy of a country is just beginning an economic recovery is often the best move one can make. A well considered business plan in Spain could be very profitable for the entrepreneur. The ease of doing business ranks 52 in the world. Spain had been a major destination for foreign investment from 1994 to 2008 with an economy growing on average 0.9% every quarter (3.6% annual rate). The country had a strong manufacturing industry and a vibrant tourist industry. These fundamental strengths are now in recovery.

There is some advantages that are unique to the country of Spain. One is the tremendous advantage of having the cultural and language kinship that Spain possesses with most of Latin America. It gives Spain a business advantage that is difficult for other countries to duplicate. There are a number of countries around the globe that have numerous citizens that speak Spanish. This is a result of being colonies of Spain sometimes for hundreds of years.

The geographical proximity to the developing countries of North Africa gives Spain another asset that not many countries can match.250px-EU-Spain.svg

Spain is a world leader in the development and production of renewable energy. In 2010 Spain became the world leader in solar power and is Europe’s main producer or wind energy.

Spain has the most extensive high-speed rail network in Europe. It is the second most extensive in the world after China.

Madrid, The Capital Of Spain

Madrid, The Capital Of Spain

Spain also is a member of the European Community which allows it a free trade zone for its growing exports. It is the 5th largest economy in the European Union. The economy finally returned to growth in the third quarter of 2013 with a rate of 0.1%. The economy grew 0.2% in the last quarter of 2013. However, the poor growth of the first two quarters of 2013 left Spain with a negative rate of growth of -1.2% for the year. The Spanish economy is expected to grow 0.4% in 2014.

Rising exports are compensating for weak public and consumer spending. The stock market in Spain is booming once again. Foreign investors are coming back. New jobs are at last being created. The current account is now in surplus and bond yields are at 8 year lows. The government budget deficit has dropped from 11.2% of GDP (Gross Domestic Product) in 2010 to 9.4% in 2011 followed by 7.4% in 2012. Still above the 6.3% target but it is continuing to drop. The Spanish government has also recapitalized struggling banks to shore up the financial system.

Example of the Over Building In The Housing Market

Example of the Over Building In The Housing Market

The property bubble that had begun growing in 2007 fed by historically low interest rates and an immense surge in immigration, had imploded by 2008. This had created soaring unemployment and a weakening economy in the years after the real estate collapse. Prices have at last bottomed out and are now stabilized. Increases can be expected in property values as the economy is beginning to grow again.

The population of Spain was estimated to be 46,700.000 in 2013. The country is 28th in world rank.  The total area of Spain encompasses 505,992 km2 (195,364 sq mi). The country ranks 52nd in size.

The country of Spain has the 13th largest economy by nominal GDP  in the world. It has the 14th largest in PPP (Purchasing Power Parity). As of 2012 Spain was the 16th largest importer and the 18th largest exporter in the world. It is the 23rd most developed country in the world.

Flag of Spain

Flag of Spain

The nominal GDP of Spain in 2013 was estimated to be 1,359 trillion USD (United States Dollar). The economy is now the size that it was between 2006 and 2007. The Spanish economy had reached 1.6 trillion in 2008. This was before the international banking crisis and the resulting Euro crisis had fully arrived. The GDP per capita in 2013 was $29,150 USD per capita from a peak of $34,815 USD, achieved in 2008.

Madrid Business Center

Madrid Business Center

The economy of Spain contracted from the years 2009 to 2013 with a brief interruption of 0.1% of economic growth in 2011. The unemployment rate rose from a low of 8% in 2007 to 26% in 2012 peaking at 26.83% in May 2013. This has led to nearly 5 million people being unemployed last year. The rate of unemployment and the reforms of the center-right government have led to an internal devaluation by lowering costs. Unit labor costs have dropped in Spain for the last 4 years until a small uptick in late 2013. The decline in wages and lower costs to business overall helped to boost exports. More labor market reforms will be necessary to maintain a competitive advantage.

Despite the years of economic contraction some benefits have resulted for the Spanish economy. For example the trade situation has improved dramatically. The trade deficit had reached a record of 10% GDP in 2007. The economic bust has led to a dramatic decline in imports. Exports on the other hand have increased as have the influx of foreign tourists. These increases are gradually leading Spain back to a trade surplus for the first time in 30 years.

Spanish Exports

Spanish Exports

Spain has usually run a trade deficit because of the high cost of imported fuel and high added value goods. Spain also imports chemicals and food. The main exports consist of manufactured goods (50% of the total), food (13%), cars (11%), and fuel (5%).

The European Union accounts for 65% of Spain’s foreign trade. The largest trading partners of Spain are in Europe. France takes 18% of the total exports of Spain and sells 11% of the country’s total imports. Germany is next in buying 15% of Spain’s exports and selling Spain 8% of its imports. Other trading partners consist of Portugal, Britain, Italy and increasingly China.

Toledo Spain

Toledo Spain

Total imports for the year 2012 equaled $323.7 billion USD declining from $361.8 billion in 2011. Total exports were $291.7 billion USD for 2012 and $303.3 billion in 2011. The current account balance dropped from -$52.28 billion USD in 2011 to -$18.8 billion in 2012. Spain has now moved into a current accounts surplus.

The Coat Of Arms For Spain

The Coat Of Arms For Spain

The rate of public debt went from 69.3% in 2011 to 84.1% in 2012. Another problem is that Spain has some of the the highest income tax rates in Europe. Thanks to a large underground economy and numerous loopholes, overall tax revenue is still rather low. Inflation in March of 2014 fell to a 4 ½ year low and has been in a downward trend for two business quarters.

Spain has improved it’s position in foreign exchange holdings and gold increasing total value from $47.1 billion USD in 2011 to $50.59 billion USD in 2012. The accumulation of external debt which had increased from $2.69 trillion USD in 2011 to $2.311 trillion USD in 2012 is slowing. Stock of direct foreign investment in Spain has increased from $700.9 billion USD in 2011 to $723.5 billion USD in 2012. Investments abroad in contrast have declined from $721.3 billion in 2011 to $716 billion in 2012 as more money is being brought home.

Santiago Basilica

Santiago Basilica

Wine Country

Wine Country

Spain has become dominant in various sectors of agriculture. It is the world’s largest producer of olive oil which accounts for 0.8% of the exports of Spain. The country has also overtaken both Italy and France to become the largest producer of wine in the world. These are just two examples of what Spain has been able to achieve in the last few years.

If you are considering an investment in Spain make sure it is one in a growth industry. For example, if you are looking at real estate at the present time prices are quite reasonable. The tourist industry is another sector of the economy that would be a good investment. It is the second largest in the world in terms of spending. Spain is a major source of fresh fruits and vegetables for Europe when they are out of season further North. Specialty crops can be grown quite profitably as a result. Spain will do quite well if economic reforms begun by the government continue in the years ahead.

 

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