This document contains summaries of economic trends in Spain and other parts of Europe: - Registered unemployment in Spain decreased by 5.5% year-over-year in January, the largest drop since 2014, though social security affiliates declined by 1.08% from December. - Spanish manufacturing industry gross added value fell for the second consecutive quarter in Q4 2018 due to global trade tensions and slowing growth. - Private equity investment in Spain reached a record €5.84 billion in 2018, a 17.9% increase from 2017, with international funds contributing 77% of the total volume.

1. 50
70
90
110
130
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
GDP Agriculture Industry Construction industry Services
0.7 1.5 3.7
Investments < 10M€ Middle market (10 - 100 M€) Investments > 100M€
12% 25% 63%
-5.5
-12
-10
-8
-6
-4
-2
0
2.000.000
2.500.000
3.000.000
3.500.000
4.000.000
4.500.000
5.000.000
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Unemployment (left axis) YoY change (right axis)
17,5
18,0
18,5
19,0
2
3
4
Affiliations to the Social Security (right axis) YoY change (left axis)
Labour market Spain
In January, registered unemployment
increased by 83,464 people compared with
December, reaching a total of 3,285,761. In
year-on-year terms, it dropped by 5.5%,
which is its lowest correction since 2014.
As for the number of Social Security
affiliates, it recorded 204,865 fewer workers
compared with December (-1.08%
monthly), the biggest fall in this month
since 2013. Compared with January 2018,
the number of registered affiliates slows
down, increasing by 2.94% (+537,269
contributors), compared with 3.1% in 2018.
Evolution of the industry
In Q4 2018, the GAV* of the Spanish
manufacturing industry fell for the second
consecutive month, 0.2% quarter-on-
quarter (-0.4% in Q3 2018), mainly
explained by the trade tensions at the global
level and the slowdown in global growth.
This evolution is in line with the data
presented in December by the
manufacturing PMI (a leading indicator of
GDP) which reported a record low since
2016 (51.1 points) and also by the Industrial
Production Index which dropped by 6.2%
year-on-year.
Private Equity Spain
In 2018, the investment in Private Equity
and Venture Capital reported a record
€5.84 billion in 670 investments for the
second consecutive year, representing an
annual increase of 17.9%. By type of investor,
international funds reported an annual
increase of 23%, contributing 77% of the
total investment volume (€4.5 billion).
By investment size, investments above €100
million accounted for 63% of the total with
€3.69 billion, the middle market*
accounted for 25% of the total, and
investments of less than €10 million
accounted for 12% of the total.
Business…
at a glance February 2019
Source: Círculo de Empresarios based on Ministry of Labour, Migrations &
Social Security, 2019
Source: Círculo de Empresarios based on Ascri, 2019
Evolution of GDP
2007=100
v
Source: Círculo de Empresarios based on INE, 2019
Affiliations to the Social Security
YoY change (%), million of people
Investment in Private Equity in Spain
€bn
v
2016 2018+28.6% 2017
3.9 5.0
+17.9%
5.8
614
investments
679
investments
670
investments
Investment in private capital, distribution by investment size
% of total
*Investment between 10 & 100 M€
*Gross Added Value
Unemployment
People, YoY change (%)
v

2. ‘Business at a glance’, a publication of the Círculo de Empresarios produced by its Department of the Economy, contains information and opinion from reliable sources. However,
the Círculo de Empresarios does not guarantee its accuracy and does not take responsibility for any errors or omissions. This document is merely informative. As a result, the
Círculo de Empresarios is not responsible for any uses that may be made of the publication. The opinions and estimates of the Department can be modified without prior warning.
www.circulodeempresarios.org
-15
-10
-5
0
5
10
15
Mining Computers Textile Machinery
and
equipament
Automobile Chermicals Energy
2000-07 2007-17
Italy debt (% of GDP)
• Governtment debt: 144.0%
• Debt private non-financial sector: 112.1%
European banks’ credit exposure: 425 €bn
(25% of GDP)
UK US Sweden Canada Germany France Spain Netherlands
FDI 2018 4.9 4.8 4.1 2.7 2.5 1.8 1.2 0.9
Annual
change (%)
-75.7 -83.6 187.2 134.8 33.3 86.7 160 -75.7
France
285
Cyprus
0.7Malta
0.2
Other banks
17.4
Ireland
0.3
UK
17.4
Portugal
1.9
Germany
58.7
Belgium
25.2
Spain
21.4
80
23
31
8
0
10
20
30
40
50
60
70
80
90
2012 2013 2014 2015 2016 2017 2018
Investment in Europe
Investment in North America
-73%
Italian debt
According to Bloomberg, based on the data
from the European Banking Authority
(EBA), European banks* currently hold 10%
of Italy's total sovereign and private debt,
equivalent to 25% of its GDP (€425 billion).
By country, banks from France have the
highest exposure with 67.2% of the total,
followed by Germany (13.8%), Belgium
(5.9%), and Spain (5%).
Brexit
The uncertainty generated by the possibility
of a ‘no-deal’ Brexit has caused British
companies to activate their contingency
plans. In January, according to the Institute
of Directors, 13% of large companies were
considering leaving the United Kingdom,
and 11% had already moved part of their
business areas, mostly to EU countries.
FDI China
In 2018, China's foreign direct investment
(FDI) into North America and Europe
plummeted by 73%, standing at $29.7
billion. This evolution is mainly explained
by the restrictions imposed by the Chinese
authorities on capital outflows and greater
control of Chinese investment by
supervisory authorities in advanced
economies.
By recipient countries, Chinese FDI is
concentrated mainly in the United Kingdom
(15.9% of the total) and the US (15.5%),
although it declined by 76% and 84%
annually, respectively.
Globalisation
In recent years, globalisation has entered a
new phase of development. The increase in
Chinese domestic demand, the growth of
more comprehensive value chains that
favour intraregional activity and the
emergence of new technologies are
generating various structural changes in the
composition of world trade in goods. The
lower trade intensity* in almost all value
chains of goods explains that, currently, the
correlation between world trade and global
GDP growth is around 1.1 compared to 2.1 in
the period 1990-2007.
Source: Círculo de Empresarios based on Baker Mckenzie & Rhodium Group, 2019
Foreign Direct Investment
$bn
v
Total of European banks* credit exposure to Italy
€bn
v
Source: Círculo de Empresarios based on Bloomberg, 2019
* Ratio of gross exports to gross production
Trade intensity* by sectors
% annual change
v
Source: Círculo de Empresarios based on Baker McKinsey & Company, 2019
*Excluding Italian Banks