Main Industry SectorsEconomic OverviewForeign Direct Investment [FDI]FDI Government MeasuresCountry Strong PointsCountry Weak PointsForeign Trade Overview
Agriculture contributes around 3% of the Spanish GDP. Spain produces wheat, sugar beet, barley, tomatoes, olives, citrus fruits, grapes and cork. Spain is the worlds largest producer of olive oil and the worlds third largest producer ofwine. Spain is the largest producer of lemons, oranges and strawberries. Spain has limited mineralresources. The manufacturing industry is dominated by textiles, industrial food processing, iron andsteel, naval machines and engineering. The new sectors such as relocation of the production of electronic components, informationtechnology and telecommunications provide a high growth potential. In 2009, industrialproduction growth rate nevertheless fell by 10.2%. Tourism represents Spains largest source of income, having become the second touristdestination of the world and thereby stimulating export of goods and services. Spain tertiary sector contributes to 2/3 of the GDP.
Spain has achieved an economic leap in the last two decades and has risen to be amongst20 of the worlds most significant economies.Spain has registered annual GDP growth rates higher than 4% between 1997 and 2000and thereafter a growth rate that is always higher than the average in the Euro zone dueto consumption and to the real-estate "boom".Spain the growth factors, which were at the root of its economic growth have beenweakened by the financial crisis, which touched the real-estate sector and weakened thebanking system.In 2009, the GDP growth fell by 3.7%, putting an end to 16 subsequent years of positiveeconomic growth.The governments stimulus policies did not prevent a rise in unemployment, whichincreased to as high as 18% of the active population, the highest rate in the EuropeanUnion in 2009.
The labour market reform which came into operation in 2010 has nevertheless helpedincrease the productivity of the Spanish economy.Both the construction sector and to some extent consumption were hit by the economiccrisis.Spain inflation is showing a tendency towards stabilization, household consumptionpredictions remain bleak for 2011.Many companies are in trouble or are closing down, especially in real-estate,construction and public works sectors.Outstanding debts of companies as well as families have increased by 12% in figures butby 61% in value.In 2010, Spain turned towards a different economic model, freeing itself from real estateas its traditional growth factor and capitalizing on improved competitiveness and ahigher added value on services.With an increase of 22.4% on its quarterly net profits, Spains number onebank Santander reflects the countrys ambition to resist the economic downturn.
In twenty years, Spain has become the ninth global economic power thanks to its cheap workforce, thespectacular boom in tourism and, starting from the year 2000, the real-estate boom. The development of foreign investments illustrates these changes well. Spain came to depend more and more on its added value, both in terms of training and R&D, as well ashigh-tech services. Spain has therefore made a radical turn towards renewable energies (wind and solar energy). In 2013, Seville will have the greatest photovoltaic production platform on the planet. Spain wants to become one of the worlds key research actors. Spain has recently developed the Malaga Valley project, which its sponsors hope will become thegreatest European research and innovation center dedicated to information and communicationtechnologies. In 2009, Spains FDI stock was EUR 465.5b. FDI flows fell sharply in 2009 with a process of disinvestment. The acquisition of holdings of suverain wealth funds in the Spanish petroleum company CEPSA by theUAE International Petroleum Investment Company was the largest acquisition of 2009. Madrid is the main destination for FDI flows, accounting for 62% of the total. In terms of FDI appeal, the countrys strengths include: proximity to Latin America, with the presence of a number of Spanish multinational companies, boom in tourism, its highly efficient transport network and development of renewable energies.
Spain applies the principle of free establishment and non-discrimination. Foreign investors can operate any type of business and under the same conditions as a localinvestor. The CEE Council Directive no. 88/361/CEE dated June 24, 1988, concerning the freemovement of capital between the residents of member States was adopted in the Spanishlegislation by Law no. 18/1992 of July 1, 1992, and came into effect on July 4, 1992 and by RoyalDecree 1816/1991 no. 1816/1991 of December 20, 1991 on Foreign Economic Transactions. The gaming, television, radio and air transport sectors are protected by restrictions for theinvestors residing outside an EU member country; it is the same for businesses manufacturingand selling arms. In the latter case, these restrictions also concern investors within thecommunity.
Spains main strong points are flexibility and adaptability of economic operators and in thequality of life the country offers.
Spain’s weak points are the low productivity of its manpower, its weakcompetitiveness as well as a growing trade balance deficit. The complexity of the regulation system with regard to the 17Autonomous Communities is also a hindrance to investment.
Foreign trade has little impact on the countrys GDP growth. The Spanish trade deficit worsened in 2009 and 2010. Spanish imports fell by half in 2009, exports too lacked vigor. The energy bill reached EUR 41.8 million, which is almost 15% of the total imports. Spanish burden decreased because of the drop in Brent future price and the increase in theproduction of renewable energy. Apart from food products (e.g.: fruits and vegetables) whose balance remains in surplus, there is anegative balance for other items, which shows that Spain is loosing its competitiveness. The main trade partners are the countries of the European Union, France being the first destinationof Spanish exports (19.2% in 2009). France imports Spanish food products, cars, chemical and textile products. Spain also has goodtrade relations with the Maghreb countries.
Visit us to download for related reportsMarket Opportunities of products and Services in Spain.Export and investment sector opportunities in Spain.Overview of Trade Regulations, Customs and Standards Spain.Spain Investment guide for beginners.Business and Project Financing in Spain.Business Travel Advisory in Spain.
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