Quarterly Report

on the Spanish Economic

Situation
Q1 2015

Crculo de Empresarios
Madrid, April 2015

GLOBAL SETTING
2

Predictions 2015
Moderate and unequal acceleration

UK
2.7%
USA
3.1%
Mexico
3%

Spain
2.5%

Eurozone
1.5%
Russia
-3.8%

Germany
1.6%
France
1.2%

China
6.8%

ASEAN-5
5.2%

Italy
0.5%

Brazil
-1%

India
7.5%
South
Africa
2%

aASEAN-5: Philippines, Indonesia, Malaysia, Thailand and Vietnam

Source: World Economic Outlook, IMF - April 2015

Japan
1%

Australia
2.8%
3

Evolution of per capita income

Last 30 years

60000
50000
40000

x 3,2

USA

x 5,6

Germany

x3,4

Japan

x 6,7

30000

Spain
20000

x10
x25

10000
0

1984

1989

1994

1999

2004

2009

Brazil
China

2014

Source: IMF - April 2015

Prices of raw materials

Index of raw material prices

TOTAL

2005 = 100

2015M3

2014M3

2012M3

2011M3

2010M3

2009M3

2008M3

2007M3

2006M3

2005M3

250
240
230
220
210
200
190
180
170
160
150
140
130
120
110
100
90
80

2013M3

Non-energy raw
materials
Energy

Source: IMF, April 2015

Price of gold

Source: Bloomberg, April 2015

Depreciation of the euro

Depreciation of the euro, with the lowest exchange rate since the spring of 2003.
Greater competitiveness of European exports outside the eurozone and more expensive
imports.
US dollars per euro
1,50
1,45
1,40
1,35
1,30
1,25
1,20
1,15
1,10
1,05
1,00

Yuan per euro

1,45

10,00

1,38

1,35

1,32

9,50

1,31

9,20

9,47

9,00

8,62

8,32

8,50

8,10

8,00
7,50

1,07

6,65

7,00
6,50

2010

2011

2012

2013

2014

2010

2015

2011

2012

2013

2014

Japanese yen per euro

Pounds sterling per euro

141,69

145,00

0,9
0,88

140,00

0,89

135,00
0,85

0,8

2015

0,82

130,00

130,21
125,32

125,00

0,82

120,13

127,68

120,00
115,00
0,72

110,00
105,00

107,81

100,00

0,7
2010

2011

Source: Bank of Spain, 2015

2012

2013

2014

2015

2010

2011

2012

2013

2014

2015

Stock market indices

Evolution of stock markets
%

2000

2002

2004

2006

2007

2008

2009

2010

2011

2012

2013

2014

-7.5

-43.9

7.3

22.0

22.3

-40.4

23.9

16.1

-14.7

29.1

25.5

2.7

Ibex 35 (Madrid) -21.7 -28.1 17.4

32.2

7.3

-39.4 29.8 -17.4 -13.1

-4.7

21.4

3.7

CAC 40 (Paris)

-0.5

-33.7

7.6

17.5

1.3

-42.7

22.3

-6,0

-17.0

15.2

18,0

-0.5

Eurostoxx 50 (Euro)

-2.7

-36.6

6.9

15.1

6.8

-44.3

22.2

-6.8

-17.1

13.8

17.9

1.2

FTSE 100 (London)

-10.2

-24.6

7.7

10.7

3.8

-32.0

27.6

9.0

-5.6

5.8

14.4

-2.7

S&P (USA)

-10.2

-23.3

9.3

13.6

3.5

-39.3

23.5

13.1

-0.3

11.8

31.5

11.4

Dow Jones (USA)

-6.2

-16.8

3.7

16.3

6.4

-34.7

18.8

11,0

5.5

7.3

26.5

7.5

Nikkei 225 (Japan)

-27.2

-18.6

7.1

6.9

-11.1

-42.1

19.0

-3.0

-17.3

22.9

56.7

7.1

Dax 30 (Francfurt)

Source: Inverco, 2015

Risks

Source: Inhouse and BBVA Research

SPAIN

10

Development of GDP
5
4

Quarterly

4.1

Annual
2.6

3
2

0.9

0.5

1
0
-1

-0.8

-2

-1.6
-2,5

-3
-4

2015Q1

2014Q3

2014Q1

2013Q3

2013Q1

2012Q3

2012Q1

2011Q3

2011Q1

2010Q3

2010Q1

2009Q3

2008Q3

2008Q1

2007Q3

2007Q1

2009Q1

-4.3

-5

Source: National Statistical Institute (INE), April 2015

11

Improved outlook for growth

The Bank of Spain predicts a rise in GDP of 2.8% in 2015 and of 2.7% in 2016, supported
by an increase in investment (5.9 and 6.7%, respectively). In addition, the Bank foresees
a growth in private consumption of 3.3% in 2015.
8

GFCF

Exports

2.7

2.8

GDP

0
-2
-4
-6
2013

2014

2015*

2016*

* Forecasts
Source: Bank of Spain, March 2015

These predictions are in line with those of FUNCAS, of 2.6% (2015) and 2.6% (2016),
and surpass those of the European Commission (2.3% in 2015 and 2.5% in 2016), the IMF
(2.5% in 2015 and 2% in 2016), and the OECD (1,7% and 1.9%).

12

Prices: CPI and underlying CPI

Annual development of general CPI and
underlying CPI
6,0
5,0
4,0
3,0
2,0

Underlying
0.2%

1,0
0,0

2014M03

2013M03

2012M03

2011M03

2010M03

2009M03

2008M03

2007M03

-2,0

2015M03

CPI
-0.7

-1,0

Source: INE, April 2015

The annual general Consumer Price Index rose from -1.07% to -0.66%. For its
part, the underlying CPI (not counting energy and fresh foods) went from
0.15% to 0.20%.

13

Interest rates
Return on 10-year bonds in Spain and Germany
8,0
7,0
6,0

Risk premium

5,0
4,0
3,0
2,0

Spain

1,0

Germany

0,0

Source: Bank of Spain, April 2015

The risk premium is around 100 basis points.

14

Situation of public accounts (I)

Structure of income and public spending as a % of GDP

Income

50
48

45.8

46

Spending

40
38

40.5
38.3

45.6

45.4

44.3

43.6

38.9
36.7
34.8

36.2

36.0

37.0

37.5

37.8

34
32
2006

Necessary
fiscal reform.

New measures
against fraud
and the black
economy.

41.1

40.9

36

30

Reform Public
Administrations

47.3

44
42

2007

2008

2009

2010

2011

2012

2013

2014

Source: IMF, April 2015

15

Situation of public accounts (II)

Public deficit, 2006-2014
% GDP
4
2

Public debt, 2006-2014

% GDP

Germany

France

110

UK

Spain

100

90

-2

80

-4

70

-6

60

-8

50

-10

40

-12

30

2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: IMF, April 2015

France
Germany
Spain
UK

2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: IMF, April 2015

From a surplus of 2% in 2006 to a deficit of 11% in 2009.

The State deficit until March rose to 9,854 million euros, some 3% more
than in the same period of 2014.

The public debt rose from 36.3% in 2007 to 97.7% in 2014.

5.8% in 2014, according to Eurostat, second highest in the Eurozone

after Cyprus.

16

Deleveraging of the private sector

The private sector reduced its debt by 477,000 million euros since the
end of 2008.

Financing of non-financial companies and

families
120

115,5

110
89,1

% GDP

100
90

Companies

83,4

80

70,7

70

Families

60
2007 2008 2009 2010 2011 2012 2013 2014
Source: Inhouse based on data from the Bank of Spain, 2015

17

Labor market (I)

Unemployment rate
% of total labor force

26.9

23.8

9.6

Source: EAPS 1Q2015 (INE)

Unemployment dropped in the first quarter of 2015 by 13,100 persons,

the largest drop in a first quarter since 2005.

18

Labor market (II)

Forecasts for the unemployment rate
% of active population
27

26.1

26
25

25.0

24.4

24
23
22
21

22.2

21.6
20.1

20.5

20
2010

2011

2012

2013

2014

2015*

2016*

* Forecasts
Source: Bank of Spain, March 2015
19

Productivity
Starting in 2011, Spain will increase its productivity by reducing labor costs.

Development
labor costs,
2007-2014
Evolucin
costes of
laborales
unitarios,
2007-2014
2010=100
110

Germany
Alemania

105

France
Francia

100

RU
UK
Espaa
Spain

T4-2014

T3-2014

T2-2014

T1-2014

T4-2013

T3-2013

T2-2013

T1-2013

T4-2012

T3-2012

T2-2012

T1-2012

T4-2011

T3-2011

T2-2011

T1-2011

T4-2010

T3-2010

T2-2010

T1-2010

T4-2009

T3-2009

T2-2009

T1-2009

T4-2008

T3-2008

T2-2008

T1-2008

T4-2007

T3-2007

T2-2007

90

T1-2007

95

Source: OECD, 2015

20

Situation of household wealth (I)

Family net financial wealth (financial assets less debt) remains at 1.1
billion euros.

Net financial wealth of families

Billion of euros
2,0
1,5

1.1

1,0
0,5

Deposits and cash

0.8

1.0
0.1

0.7

1.1

0,0
-0,5

-0.8

Other financial
assets*

Financial liabilities

-1,0
NET FINANCIAL
WEALTH
*Other financial assets: pension funds, insurance, fixed income...

Source: Inverco and inhouse, 2015

21

Situation of household wealth (II)

The net wealth of families (financial wealth plus real estate wealth
without debt) doubled between 1999-2013, from 2.7 to 5.3 billion
euros.
Net wealth of families
Billions of euros

7.2

8,0
7,0

Real estate wealth

6,0

5.3

5,0
4,0
3,0

Financial assets
Financial liabilities

4.2
2.7

NET WEALTH

2,0
1,0

2.0

0,0

1.1

-0.8

-1,0
2000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Source: Bank of Spain, Inverco and inhouse, 2015

22

Internationalization (I)
Historic change in the current account balance in 5 years.
After 26 years, the Spanish economy ended 2013 and 2014
with a surplus in its current account.
Evolution of Spanish current account, 2000-2015
% GDP
2

0,8

0,1

0,4

-2
-4
-6
-8
-10
-12

-10,0
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014* 2015*

Estimated*
Source: IMF, 2015

23

Internationalization (II)
Advance in the contribution of exports to the GDP:
from 22.7 % in 2009 to 32% in 2014
Exports. Main European exporters vs.
Spain

Exports
p as part of GDP

(base 100 =1999)

Variation,2009-2014
2009-2014
Variacin

350

World
Spain

250

Netherlands

200

Germany

150

Italy
UK

100

France
2013

2011

2009

2007

2005

2003

2001

50
1999

Chile
Chile

China*
China*

UK
RU

Korea*
Corea*

France
Francia

Germany
Alemania

USA*
EEUU*

Netherlands
Holanda

* 2013

Spain
ESPAA

300

Portugal
Portugal

90
80
70
60
50
40
30
20
10
0
-10

X/GDP
X/PIB
2014
2014

Source: WTO (2015) and in-house

Source: OECD, 2015

24

Internationalization (III)
Diversification both geographically and by product is the key to
relaunching the Spanish exports.
Geographical diversification

Diversification by products

30
25

70,0

% of total 2014

Variation 2014/2013

60,0

Variation

20
15

50,0

10

40,0

30,0

20,0

-5

10,0

-10

0,0

% of total

-15

EU28

-10,0

America

Asia

Africa

Rest of Rest of
Europe world

-20,0
Source: Datacomex (2015)

New markets and important growth

of exports to Asia and the Americas.

Source: Datacomex (2015)

Diversified and added value

exports
25

Internationalization (IV)
Leadership in tourism 2014 was a record year

Source: WTO, 2015

In the first quarter of 2015 there were 10.6 million arrivals of non-residents, an
increase of 5.3% over the same period of 2014, with more Asian and British
citizens. In the first quarter of 2015 their spending increased by 7% with regard
to the same period of 2014.
26

Spanish and foreign investment

Spanish investment overseas, 2000-2014
Millions of euros

+9.8%
interannual

30.000
20.000
10.000
0

Productive
investment
Inversin
productiva
(sin ETVE)

Source: Ministry of the Economy, Registry of Overseas Investment (2015)

Foreign
investors
in Spain en Espaa
Inversores
extranjeros
del
total
en 2014
variacin
2014/2013
%%of
total
in 2014
and yvariation
2014/2013
25,0
20,0
15,0
10,0

21,7

108,2

82,8

-12

-11,6

112,6

-41,8

-61,4

5,0

1.030

56,4

-71,2

0,0

Source: : Ministry of the Economy, Registry of Overseas Investment (2015)

27

Spains position in international rankings

28

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