3. GDP growth outlook
Source: CĂrculo de Empresarios based on IMF, 2017
2017
3.2
3.6
-3.3
3
1.5
2.2
2.5
1.8
-0.2
1.8
2016
2017
2.1
Annual
change
World
2018
3.7
1
1.5
6.7
6.8
-2.2
1.5
3
7.1
6.7
2016
-3.6
0.7
1.8
1.7
Forecast
4. Source: CĂrculo de Empresarios, 2017 4
Geopolitical events
Geopolitical risks dominate the actual scenario
North Korean crisis threats global stability
Brexit: Slower negotiations between UK and the EU
US-China trade disputes
Catalonia Independence challenge
5. Source: CĂrculo de Empresarios, 2017 5
Global strengths and weaknesses
Strengths Weaknesses
6. Source: CĂrculo de Empresarios based on IMF, Markit and BlackRock, 2017 6
Steady GDP growth
PMI and GDP data suggests a more synchronised growth
Forecast
54
Global PMI composite*
(September)
Greater than 60% of the countries
presented a PMI higher than 50
*Data > 50 indicates expansion
2,1 2,2
1,7
2,2 2,0
4,7
4,3 4,3
4,6 4,9
0
1
2
3
4
5
6
2014 2015 2016 2017 2018
Real GDP growth
%
Advanced Emerging Global
7. Source: CĂrculo de Empresarios based on IMF, 2017
7
Share of world GDP
Emerging countries continue increasing its share of global GDP
2000 2017
7.4% 18.3%
4.2% 7.5%
20.6% 15.2%
Share of global GDP (ppp)
63,6
40,6436,4
59,4
30
35
40
45
50
55
60
65
70
Share of global GDP (PPP)
% total
Advanced Emerging
8. World trade recovery
Source: CĂrculo de Empresarios based on IMF and WTO, 2017 8
After 2 years of weak trade, it gains momentum
Global trade intensity diminished to A
ratio of 1:1, but it is picking up
Global exports share
1.
2.
3.
4.
5.
China
US
Germany
Japan
Netherlands
13.2
9.1
8.4
4
3.6
16. Spain 1.8 (1.7)
(8.1)
%
(3.8)
(3.4)
(9.1)
(13.8)
In brakets, 2015 data
-1
0
1
2
3
4
5
6
-15
-10
-5
0
5
10
15
Global trade growth
% annual
Global trade (lef axis)
Real GDP (right axis)
10. Source: CĂrculo de Empresarios based on IMF and BlackRock, 2017
10
Chinaâs growth surprised to the upside (I)
After growing 6.7% in 2016, Chinaâs forecasts has been revised up
Chinaâs GDP forecasts for 2017
January 2016 IMF outlook
6%
6.5
%
6.8%
Note: In 2016 (in current prices), Chinaâs GDP size was the equivalent of 12 emerging countries: India, Brazil, Russia, Mexico,
Indonesia, Turkey, Saudi Arabia, Argentina, Poland, Iran, Thailand and Nigeria
January 2017 IMF outlook October 2017 IMF outlook
11. -10,0
-5,0
0,0
5,0
10,0
15,0
20,0
China's external sector
% annual change
Exports Imports
Source: CĂrculo de Empresarios based on Reuters and Safe, 2017 11
The external sector shows national and international demand recovery while
capital outflows stabilized
Note: According to Pimco,during the first 3 quarters of 2017, emerging Asia has received inflows of aproximately 90 billion $
(specially fixed-income)
During 2016, yuan
deppreciates 7%
Chinaâs growth surprised to the upside (II)
2,9
3,1
3,3
3,5
3,7
3,9
4,1
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
China's currency reserves
Trillion $
12. Source: CĂrculo de Empresarios based on Pimco, Conference Board and Bloomberg, 2017 12
... Although still faces challenges (III)
Corporate debt: 159% of GDP
Economic transition
North Korea tensions
US trade policy
Chinaâs risks Chinese debt composition
% GDP
37
45
159
Corporates Government
Families
13. Africa: population (I)
Source: CĂrculo de Empresarios based on UN, 2017
Africa will represent approximately 50% of global population growth between
2017-2030
1,256 million people
16.6% of global
population
60% < 24
years
2017-2030: +448 million
2017
Population (million) 2017 2030
World 7,55 8,55
Africa 1,26 1,70
Asia 4,50 4,95
Europe 742 739
Latam and Caribbean 646 718
North America 361 395
Oceania 41 48
15. 0
20
40
60
80
100
120
140
160
180
200
Nigeria: society (I)
Source: CĂrculo de Empresarios based on Worldometers, United Nations, 2017
⢠2017 population : 191 million
⢠Most african country populated and
the 7th in global terms*
Nigeria population
Million
⢠41% illiteracy
⢠IDH: 0.527 (0.884 Spain)
1 China 1,409.51 11 Japan 127.484
2 India 1,339.18 12 Ethiopia 104.957
3 US 324.459 13 Philippines 104.918
4 Indonesia 263.991 14 Egypt 97.553
5 Brazil 209.288 15 Vietnam 95.541
6 Pakistan 197.016 16 Germany 82.114
7 Nigeria 190.886 17 Congo 81.34
8 Bangladesh 164.67 18 Iran 81.163
9 Russia 143.99 19 Turkey 80.745
10 Mexico 129.163 20 Thailand 69.038
16. Source: CĂrculo de Empresarios based on IMF, 2017
Biggest african economy and the 23rd of the world. Pwc estimates
that Nigeria will stand in the 16th position by 2030
Nominal GDP (current billion $) Nominal GDP per capita(current $)
2,123$
5,600$
Nigeria: economy (II)
0
100
200
300
400
500
600
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Nigeria South Africa
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
Nigeria South Africa
17. Source: CĂrculo de Empresarios based on CIA. PWC. 2017
High oil dependence
⢠Energy products account 90% of total exports
⢠76% of total public income
⢠Worldâs 10th largest country by proven oil
reserves
⢠Biggest oil producer in Africa
Urbanization increases at an annual
pace of 3.5%⢠40% of nominal GDP
Services: 60% del PIB Industry: 19% del PIB
Primary: 21% del PIB
GDP composition
Employment composition
Primary: 70%
Industry: 10%
Services: 20%
Nigeria: economy (III)
60%19%
21%
Million barrels
1 Venezuela 300
2 Saudi Arabia 269
3 Canada 171
4 Iran 157
5 Iraq 143
6 Kuwait 104
7 UAE 98
8 Russia 80
9 Lybia 48
10 Nigeria 37
18. US: hurricane costs (I)
Source: CĂrculo de Empresarios based on ISM and FT, 2017
18
Slightly short term economic impact, but confidence remains solid
0 50 100 150 200 250
2017 Harvey
2012 Sandy
2008 Sichuan
1995 Kobe
2005 Katrina
2011 Tohoku
PĂŠrdidas econĂłmicas estimadas
Miles de millones $
Estimate economic losses
Billion $
US Manufacturing ISM
45
47
49
51
53
55
57
59
61
63
19. US: economic growth upturn (II)
19Source: CĂrculo de Empresarios based on BEA and JP Morgan, 2017
1.5
2.3
Real GDP growth
%
2016
2Q- 2017
8 consecutive years of economic growth (3rd largest expansionary period)
1.2
3.1
1Q- 2017
2.2
2017 IMF forecast
GDP composition
2Q- 2017. Nominal Tn $
69,1
17,3
12,7
3,8 -2,9
Private consumption Public consumption
Investment (no construction) Construction
Net exports
23. EU: solid recovery and economic dynamism (I)
23Source: CĂrculo de Empresarios based on IMF and Eurostat, 2017
2
2.3
2.1
Real GDP growth
%
2016
2017
2018
Unemployment rate
% labour force 7.6
National demand supports economic growth
-1 pp since 2016
24. -2,5
-2
-1,5
-1
-0,5
0
0,5
1
1,5
2
EU current account balance
% GDP
EU: external sector success (II)
24
Source: CĂrculo de Empresarios based on Ameco, 2017
Surplus
Deficit
Exports momentum continue improving the external balance
2.000
3.000
4.000
5.000
6.000
7.000
8.000
EU goods and services exports
Billion âŹ
28. 20
25
30
35
40
45
50
55
60
65
70
Brent spot price ($)
Oil: slightly oil increase
Source: CĂrculo de Empresarios based on EIA and Bloomberg, 2017 28
Brent crude oil prices stabilized between 55-60$ waiting for the OPEC compliance
OPEC and non-OPEC countries producers achieved 120% compliance in September
-70%
-50%
-30%
-10%
10%
30%
50%
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Rentabilidad anual del Brent
1987-2017
Fuente: CĂrculo de Empresarios a partir de EIA, 2017
Variaciones anuales
superiores al 20%
Forecast
Annual brent performance
1987-2017
Years > 20%
29. Commodities
29
Soruce: CĂrculo de Empresarios based on JP Morgan, 2017
Actual =
10 y low. level 10 y max. level
72.88 $
84.46$
47.70 $
237.95$
101.82$
48.63$
26.21 $
57$
145.29$
705 $ 1.892$
1.280$
Bloomberg
Commodity Index
Agriculture
Crude
Gold
Commodity prices
30. -0,77%
-2,20% -2,70%
-5,30%
-13%
Argentine Peso Brazilian Real Chinese Yuan Indian Rupee Mexican peso
Dollar performance against emerging
currencies, Max 2017-July 2017
5%
3,60% 3,30%
-3,00%
Swiss Franc Euro Sterling pound Japanese Yen
US dollar performance against the most
traded currencies, Max 2017- July 2017
Foreign Exchange market
Source: CĂrculo de Empresaios based on Bloomberg, 2017
30
U.S dollar appreciated against the main currencies in the world
34. Forecasts: the expansion continuesâŚ
⌠but at a moderate pace
34
2018
2019
2017
3.2%
3%
2.6%
Source: CĂrculo de Empresarios based on Bank of Spain, September 2017
The Spanish government predicts an increase in GDP of 3.1% in 2017 and cuts its forecast for 2018 from
2.6% to 2.3% because of rising political tensions in Catalonia (= 19% of Spanish GDP)
Airef: â1pp decrease in Catalonia growth results in an aditional decline of 0.2 pp in Spanish growthâ
IMF keeps its forecast for 2017 (3.1%) and increase the one for 2018 to 2.5% (without taking into account
the effects of secessionist challenge)
35. Forecasts 2017: composition of growth
2017 GDP annual change = 3.1%
⢠Private consumption = 2.4%
⢠Public consumption = 0.8%
⢠Gross fixed capital formation = 4.3%
Domestic demand
Goods and services
% annual change
2.5 ppgrowth contribution
Source: CĂrculo de Empresarios based on Bank of Spain, September 2017 35
0.6 pp
External demand
Goods and services
% annual change
growth contribution
⢠Exports = 6.4%
⢠Imports = 5%
36. Current growth
Spain keeps the positive spread
growth with the OECD and the
Eurozone
External demand: 6th consecutive
quarter of positive contribution
36Source: CĂrculo de Empresarios based on Bank of Spain, Eurostat and OECD, 2017
Q3 2017 â Spanish GDP increased by 3.1% in annual terms
(Bank of Spain and National Statistical Institute â NSI)
-8
-6
-4
-2
0
2
4
GDP (annual change) and contribution of
domestic and external demand (pp)
Spain domestic demand
Spain external demand
Spain GDP
Eurozone GDP
OECD GDP
37. Labour market (I)
37Source: CĂrculo de Empresarios based on NSI, 2017
Unemployment recovers
levels of 2009
16.38% of labour force =
3,731,700 unemployed
Labour Force Survey - Q3 2017 (NSI)
After 8 years, the number of occupied persons has again overcome 19 millions
Ocuppied = 19,049,200
â Private sector = 15,987,200
â Public sector = 3,062,100
17,24
26,94
16,38
19.284,4
19.098,4
16.950,6
19.049,2
15,0
17,0
19,0
21,0
23,0
25,0
27,0
29,0
15.500
16.000
16.500
17.000
17.500
18.000
18.500
19.000
19.500
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
Occupied and unemployment rate, Q1 2009 - Q3 2017
Thousand; % labour force
Unemployment rate (right)
Occupied (left)
38. Labour market (II)
Unemployment rate in Spain = 17.1% of labour force
vs. Eurozone average = 9.1%
38Source: CĂrculo de Empresarios based on Eurostat, 2017
Unemployment rate in the European Union (August 2017, Eurostat)
7,6
9,1
17,1
0
5
10
15
20
25
Unemploymentrate EU 28, August 2017
% of labour force
39. Labour market (III)
Unemployed
Ⲡ27,858 vs. August
âź 310,115 vs. September 2016
Affiliates
Ⲡ26,318 vs. August
Ⲡ624,141 vs. September 2016
New contracts
= 1,993,267 in September
Ⲡ86,267 vs. September 2016
39Source: CĂrculo de Empresarios based on Ministry of Employment and Social Security, October 2017
Airef: â1% decrease in Catalonia employment results in a decline of 0,17% in the rest
of Spain and of 0,21% in total Spanish employmentâ
Affiliates to Social Security and unemployed (September 2017, SEPE)
19.377.776
16.393.866
18.336.161
1.965.869
4.763.680
3.410.182
0
1.000.000
2.000.000
3.000.000
4.000.000
5.000.000
6.000.000
16.000.000
16.500.000
17.000.000
17.500.000
18.000.000
18.500.000
19.000.000
19.500.000
20.000.000
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Affiliates
Persons
Unemployed
40. Labour market (IV)
40Source: CĂrculo de Empresarios based on Bank of Spain, September 2017
Ⲡemployment in services and ⟠in manufacture and primary sector
Employment by sectors
16,1
12,5
10,8
8,8 8,2 8,1
6,9 6,9
5,9
4,4 4,2
3,4
2,5
1,1
0,2
0
2
4
6
8
10
12
14
16
18
20
22
Employmentby sectors
% total
1993 2007 2016
41. September 2017:
⪠Annual CPI increases to 1.8%, mainly
because energy and fresh food prices
evolution
⪠Prices are rising above the Eurozone
average, keeping a positive spread of
0.2 pp
⪠Core inflation = 1.2%
41Source: CĂrculo de Empresarios based on NSI and Eurostat, 2017
Prices
October 2017:
⪠Estimated annual CPI = 1.6%
1,8
1,6*
1,2
1,4
-0,2
0
0,2
0,4
0,6
0,8
1
1,2
1,4
1,6
1,8
2
2,2
2,4
2,6
2,8
3
General and core inflation
% annual change
CPI Spain
Core CPI Spain*
CPI Eurozone
* Excluding energy andnon-processed food
* Estimated
42. Financial conditions (I)
42Source: CĂrculo de Empresarios based on Bank of Spain, 2017
Note: Credit to households and business measured in stock terms
Credit to households and business increases
-7,0
-5,0
-3,0
-1,0
1,0
3,0
5,0
Aug-14
Oct-14
Dec-14
Feb-15
Apr-15
Jun-15
Aug-15
Oct-15
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Credit to households
Stock; % annual change
Total
House purchase
Consumption and other
Consumption and others
Ⲡ4.4% last year
-10
-8
-6
-4
-2
0
2
4
6
Aug-14
Oct-14
Dec-14
Feb-15
Apr-15
Jun-15
Aug-15
Oct-15
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Credit to business
Stock; % annual change
Total
From resident entities
Other
Total credit decreases
43. Financial conditions (II)
43
Source: CĂrculo de Empresarios based on Bank of Spain, 2017
Private debt keeps going down and public debt continues to increase
In August, public debt = 1,133,009 MâŹ
Non-financial
companies debt
83.6%
Households debt 63.6%
Q2 2017 (% GDP)âŚ
58,0
54,2
51,3
47,6
45,3
42,3
38,9
35,6
39,5
52,8
60,1
69,5
85,7
95,5
100,4 99,4 99,0
99,9
99,8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Q1
2017
Q2
PublicAdministrationsdebt
% GDP
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
Jan-08
Jun-08
Nov-08
Apr-09
Sep-09
Feb-10
Jul-10
Dec-10
May-11
Oct-11
Mar-12
Aug-12
Jan-13
Jun-13
Nov-13
Apr-14
Sep-14
Feb-15
Jul-15
Dec-15
May-16
Oct-16
Mar-17
Aug-17
Non-financial sectors debt
Million âŹ
PPAA
Non-financial corporations
Households
44. National Accounts
44
2017*: forecast
Source: CĂrculo de Empresarios based on IMF, 2017
Public deficit 2018
The Spanish government has
increased its forecast from 2.2% to
2.3% due to the impact of the
political situation in Catalonia and
the absence of budget for 2018:
â General Government = - 0,8%
â Social Security = - 1,1%
â Autonomous Communities = - 0,4%
â Local Entities = 0,0%
Source: Ministry of Economy, Industry and
Competitiveness, 2017
-1,0
-0,5 -0,4 -0,4
0,0
1,2
2,2
2,0
-4,4
-11,0
-9,4 -9,6
-10,5
-7,0
-6,0
-5,1
-4,6
-3,2
-12
-10
-8
-6
-4
-2
0
2
4
30
32
34
36
38
40
42
44
46
48
50
Public revenues and expenditures
% GDP Revenues
Expenditures
Balance
45. External sector (I)
45
Source: CĂrculo de Empresarios based on Bank of Spain, 2017
Relevance of tourism
-30
-20
-10
0
10
20
30
40
50
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Current account and capital balances
Bn âŹ
Goods and servicies (except tourism)
Tourism
Incomes
Capital balance
Superavit (+) / Deficit (-)
46. 46
Trade balance, January â August 2017
(annual change)
Geographical distribution
(%)
Exports
Imports
Source: CĂrculo de Empresarios based on Ministry of Economy, Industry and Competitiveness, October 2017
External sector (II)
Imports
Capital goods
Chemical products
Energy
Exports Ⲡ9.1% 182,302.1 MâŹ
Imports Ⲡ11.6% 198,716 MâŹ
BALANCE ⲠDeficit 49.3% -16,413.8 MâŹ
Ⲡ35.5% energy
deficit
Top 3 sectors
(% of total weight)
20.2
16.9
16.3
21.4
15.0
13.5
Exports
Capital goods
Food
Automotive industry
-66.970,7
-16.413,8
-80.000
-60.000
-40.000
-20.000
0
20.000
40.000
60.000
80.000
100.000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Million ⏠Exports Imports Balance
Europe
71,5
EU
65,7
America
10,8
Asia
9,3
Africa
6,4
Other
2
Exportaciones
Europe
60,3
EU
54,4
Asia
20,4
China
8,5
America
10,9
Africa
8,1
Other
0,3
Importaciones
47. External sector (III)
47
Source: CĂrculo de Empresarios based on NSI, 2017
Tourism
Catalonia.
Major international tourist destination
From 1 October, in Catalonia ...
â âź 15% of tourist activity
â âź 20% of reservations for the end of 2017
(Exceltur) (âź1,197 M⏠- Q4 2017)
â Slump in investments
Spanish tourist sector growth will also suffer the
impact and will decrease from 4,1% to 3,1% in
2017.
Catalonia
24,0
BalearicI.
17,9
Canary I.
16,2
Andalusia
14,0
Valencia
11,0
Madrid
7,7
Other
9,2
International arrivals, January - August 2017
% of total weight
48. Interest rates and risk premium
48Source: CĂrculo de Empresarios based on Bank of Spain and National Central Banks, 2017
Ⲡrisk premium (120 bp) due to secessionism in Catalonia
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
-0,5
0,5
1,5
2,5
3,5
4,5
5,5
6,5
7,5
27-Oct-08 27-Oct-09 27-Oct-10 27-Oct-11 27-Oct-12 27-Oct-13 27-Oct-14 27-Oct-15 27-Oct-16 27-Oct-17
Ten years bond yield, Spain and Germany(%)
Risk premium (bp)
Spain Germany Risk premium (right)
Ⲡafter ReferendumLaw (Sep.6th),
illegal Referendum(Oct.1st), DUI and
art. 155 in Catalonia
49. Companies in Catalonia
49Source: CĂrculo de Empresarios based on Colegio de Registradores, 2017
Catalonias´s ability to create new
business with regard to all of Spain,
has fallen by more than 10 pp from its
peak level in 2016
After October 1st, more
than 1,800 companies have
moved their headquarters
due to the political
instability in Catalonia (85%
of its market capitalization).
The top 46
companies that have
moved their
headquarters outside
Catalonia = 36.5% of
its regional GDP
15
17
19
21
23
25
27
29
700
900
1.100
1.300
1.500
1.700
1.900
2.100
2.300
Companies constitutedinCatalonia
Constituted (left axis) % total (right axis)
1 2
4
212
177
144
81
68
105
112
268
117
92
107 102
78
140
0
25
50
75
100
125
150
175
200
225
250
275
03-oct
04-oct
05-oct
06-oct
07-oct
08-oct
09-oct
10-oct
11-oct
12-oct
13-oct
14-oct
15-oct
16-oct
17-oct
18-oct
19-oct
20-oct
21-oct
22-oct
23-oct
24-oct
25-oct
26-oct
27-oct
Number of Catalan companies relocated after
October 1st
50. Spain´s position in international rankings
Iceland
N. Zealand
Portugal
SPAIN
50
The Global Competitiveness Report
2017 - 2018 (137 countries)
Source: WEF, Sept. 2017
âź2
(VS. 2016)
Switzerland
Sweden
Netherlands
SPAIN
1
2
3
40
BlackRock Sovereign Risk Index Sep.
2017 (60 countries)
Source: BlackRock, 2017
1
2
3
23
2017 Global Peace Index
(163 countries)
Source: Institute for Economics and Peace, 2017
â˛2
(vs. 2016)
USA
Singapore
Sweden
SPAIN
1
2
3
17
2017 Global Connectivity Index
(50 countries)
Source: Huawei, 2017
â˛2
(vs. 2016)
Singapore
USA
Malasya
SPAIN
1
2
3
44
Global Human Capital Index 2017
(130 countries)
Source: WEF, 2017
Switzerland
USA
Singapore
SPAIN
1
2
3
34
Sweden
Australia
UK
SPAIN
1
2
3
6
Global Youth Wellbeing Index 2017
(29 countries)
Source: International Youth Foundation, 2017
â˛2
(vs. 2014)
âź3
(vs. Jun. 2017)
â˛1
(vs. 2016)