Global and Spanish economic perspectives Q2 2021

Quarterly
report
J U L Y 2 0 2 1
GLOBAL AND SPANISH ECONOMIC PERSPECTIVES
Q2 2021

INDEX
• Global economy
• Asia
• North America
• South America
• Europe
GLOBAL
01.
• Summary, challenges, forecasts and growth
• Labour market
• Public accounts and Social Security funds
• Prices
• External sector: trade and tourism
• Business creation
• Competitiveness
SPAIN
02.
• Inflationary pressures
• Stock markets
• Bond markets
MARKETS
03.

GLOBAL AND SPANISH ECONOMIC PERSPECTIVES. Q2 2021
Summary
The global economic situation
The pandemic caused by Covid-19 and the subsequent health and
economic impact led to a 3.3% fall in global GDP in 2020, with China being
the only major economy to register positive growth (2.3%).
After a year of the pandemic, a high level of uncertainty remains about
how the future will pan out in both epidemiological and economic terms.
With good progress in the vaccination programs and the stimulus
measures, a return of confidence is expected, as well as the
disappearance of any mobility and activity restrictions. This, in turn,
should lead to an upturn in growth which, according to the IMF, will reach
6%, provided that any virus variants and doubts on the efficiency and
safety of the vaccines do not dampen these expectations. Recovery will
be uneven among countries and in good measure it will depend on their
productive structures. Those with economies dependent on tourism and
sectors that require greater social contact will feel the negative effects of
the crisis for longer.
6%
The world economy will recover from
2021 onwards as a result of the
stimulus measures and as the
vaccination program advances
-3.3%
In 2020, global GDP registered a
historic fall as a result of the
pandemic
4

Economic recovery
after the historic fall caused by the pandemic
Recovery will progress at a diverse rhythm, depending on…
The IMF has revised its growth forecasts upward for 2021-2022
-6
-4
-2
0
2
4
6
8
-3.3
6
4.4
2020 2021 2022
-4.7
5.1
3.6
-2.2
Emerging
economies
5
Advanced
economies
World
6.7
2020 2021 2022 2020 2021 2022
Source: Círculo de Empresarios based on IMF, 2021.
1
2
3
4
…the impact of the new waves of the pandemic and incidence
of its variants.
…progress in the vaccination program, conditioned by an
increase in supply and improvements in distribution and
confidence.
…the easing of mobility and social contact restrictions.
…the scope of the economic monetary and fiscal stimulus
measures to soften the effects of the crisis and the
moment in which they are withdrawn.
% year-on-year change
5

Europe will recover at a more
moderate rate
Global growth (6% year-on-year)
led by the US and China
Global forecasts
-3.5
6.4
3.5
2020 2021 2022
US
-1
8.6 6
2020 2021 2022
Emerging and
developing Asia
-1.9
3.4 4
2020 2021 2022
Subsaharan
Africa
-7
4.6 3.1
2020 2021 2022
Latin America and
the Caribbean
-2.9
3.7 3.8
2020 2021 2022
Middle East and
Central Asia
-5.2
4.5 3.6
2020 2021 2022
Europe
6

Global demand will boost economic activity
Source: Círculo de Empresarios based on CPB Netherlands, Bureau for Economic Policy Analysis and Statista, 2021.
Global activity will accelerate as restrictions are lifted and the
vaccination program advances
58.4
36.3
Growth
Shrinkage
May-2020
JP Morgan Global Composite PMI. Points
May-2021
The recovery of global demand will reactivate industrial
production
2010 index = 100
75
80
85
90
95
100
105
110
115
120
125
130
135
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Global industry production Global exports
Eurozone industry production US industry production
7

Manufacturing PMIs
After the severe and widespread contraction registered in the first half of 2020 with the outbreak of Covid-19, manufacturing activity bounced back in the first five
months of 2021. This is as a result of the recovery of demand and confidence regarding improvements in the epidemiological situation, advances in the
vaccination program, and the gradual easing of activity restrictions, and monetary and fiscal support by the authorities
Source: Círculo de Empresarios based on Markit and JP Morgan, 2021. 8

Consumer confidence returns to the pre-crisis level
Source: Círculo de Empresarios based on The Conference Board and Statista, 2021.
A sustained increase in private consumer spending by
families on a global level is expected
Tr US$ and % year-on-year change (right axis)
In Q1 2021, consumer confidence (108) exceeded its pre-pandemic
level (106) and has registered its highest level since 2005
Score > 100: there are more optimistic than pessimistic consumers
By regions, the results vary according to the level of access to Covid-
19 vaccines
106
92
98
108
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021
na
9
10.4
1.8
3.1 2.8
-4.9
2.3
5.7
5.3
2.9
-7.0
8.2
6.4 6.4
6.3
5.6
-8
-6
-4
-2
0
2
4
6
8
10
12
40
45
50
55
60
65
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
% year-on-year change (right axis) Tr US$
Forecasts

Asia: uneven recovery
In 2020, against a context of global shrinkage, China grew 2.3%
and recovered its pre-Covid-19 GDP level
India and China will be the fastest growing economies in 2021
-8
-6
-4
-2
0
2
4
6
8
10
12
14
China India ASEAN
2019 2020 2021 2022
10

China: the rate of recovery moderates
18.3
0.6
-15
-10
-5
0
5
10
15
20
Q1
2019
Q2
2019
Q3
2019
Q4
2019
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
% year-on-year % quarterly
In Q1 2021, its GDP moderated (0.6% quarter-on-quarter against the
expected 1.4%). It registered a maximum 18.3% year-on-year as a result
of the base effect
After recovering its pre-crisis level in February, the consumer
confidence index fell to 122.2 points in March
127
122.2
112
114
116
118
120
122
124
126
128
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
% year-on-year and quarterly change
11
Source: Círculo de Empresarios based on Statista, 2021.
Score > 100: there are more optimistic than pessimistic consumers

China: normalization of economic activity
In April 2021, industrial production increased 9.8% year-on-year and
14.1% compared to April 2019. Accumulated investment in fixed
assets between January and April grew 19.9% year-on-year
% year-on-year change (accumulated investment in fixed assets since January)
In Q1 2021, the use of productive capacity was at 77.2%, 9.9 pp above
that of Q1 2020
75.9
76.4 76.4
77.5
67.3
74.4
76.7
78
77.2
Q1
2019
Q2
2019
Q3
2019
Q4
2019
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
%
-30
-20
-10
0
10
20
30
40
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-Feb-21
Mar-21
Apr-21
IPI FAI
12

0.1
8.9
17.1
48.7
30
14.8
10.5
-9.8
Q2 2020 Q3 2020 Q4 2020 Q1 2021
% year-on-year % quarterly
China: an improvement in trade, but will it last?
With the recovery of global demand, China’s exports increased 48.7% year-on-year in Q1 2020, although its progress
is conditioned by the re-establishment of supply chains
% year-on-year and quarterly change
140
160
180
200
220
240
260
280
300
Jan/Feb-
20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Exports Imports
Monthly data
Bn US$
13

North America: the US will lead growth in the region
The US
Canada
Mexico
14

The US: progress in economic recovery
Source: Círculo de Empresarios based on Bureau of Economic Analysis and Statista, 2021.
In Q1 2021, US GDP grew 6.4% quarter-on-quarter and 0.4% year-on-year. The increase with respect to the previous
quarter can be mainly explained by the increase in private consumer spending (+10.7%) and the positive contribution of
public spending, while investment and foreign demand impacted negatively on growth
2.9 1.5 2.6 2.4
-5
-31.4
33.4
4.3 6.4
-9
0.4
-40
-30
-20
-10
0
10
20
30
40
Q1
2019
Q2
2019
Q3
2019
Q4
2019
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
% quarterly % year-on-year
% quarterly and year-on-year change
15

The US: stagnation in unemployment adjustment
The total unemployment rate has stabilized at 2014 levels,
1.5 points above the pre-Covid-19 level
Source: Círculo de Empresarios based on Bureau of Labor Statistics, 2021.
Apr-20
14.8
Apr-21
6.1
3
5
7
9
11
13
15
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
Unemployment of under 25s
27.4% 11%
April 2021
% labour force
Of the workers who lost their jobs…
April 2020
Temporarily
laid off
88%
April 2020
Temporarily
laid off
33%
April 2021
16
% of the workforce who are 16- to 24-year-olds

The US: economic policies underpin recovery
Fiscal policy and monetary stimulus packages boost activity
Source: Círculo de Empresarios based on OECD and Statista, 2021.
In March 2021, Congress passed a rescue plan that will involve spending
the equivalent of 8.5% of GDP
The Fed aims to maintain its low interest rate policy until complete
employment recovery is achieved, and the inflation rate is above 2%
-9.4
-6
-5.4
-4.7
-5.4
-4.3
-6.3 -6.7
-15.8 -15.9
-9,5-9.5
82.6
109
80
85
90
95
100
105
110
115
-18
-14
-10
-6
-2
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Deficit Net debt (right axis)
% GDP
17
0
1
2
3
4
5
6
7
8
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Bn US$
%
Value of assets on the balance sheet of the Fed (right axis)
Fed interest rate
15 March
“Quantitative
Easing”
Tr US$

50
60
70
80
90
100
110
120
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
Total US Rest of the world
Canada and Mexico: strong foreign demand
Source: Círculo de Empresarios based on OECD and Statistics Canada, 2021.
Exports, especially manufactured goods, benefit from the US’s economic recovery
2019=100
40
50
60
70
80
90
100
110
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Feb-19
Apr-19
Jun-19
Aug-19
Oct-19
Dec-19
Feb-20
Apr-20
Jun-20
Aug-20
Oct-20
Dec-20
Feb-21
Total US Rest of the world
As restrictions to contain the pandemic are lifted, private consumption and investment will gradually bounce back, which will boost employment.
2019=100
Canada Exports Mexico Exports
18

South America diverse recovery
Countries such as Chile will recover pre-pandemic levels in 2022 and
others, such as Argentina, will do so later.
Significant divergence among economies
High levels of poverty, low institutional quality, high rates of informality
in the labor market, weaknesses of health systems and a high
proportion of the population living in urban areas.
Higher degrees of health and economic vulnerabilities
can be explained by structural characteristics
Recovery in 2021 with expected yearly growth of 4.6%
19
Source: Círculo de Empresarios based on IMF and Bank of Spain, 2021.

Brazil: upturn with its lights and shadows
Recovery supported by private consumption and investment, although the increase in inflation and public debt has
generated uncertainly regarding the duration of the fiscal and monetary stimulus packages
74
76
78
80
82
84
86
88
90
1
2
3
4
5
6
7
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
% GDP
% year-on-year
Inflation Gross debt (right axis)
Inflation has exceeded 6% and public debt is around 90% of
GDP, 15 points above the level at the end of 2019
-4.1
3.7
2.5
-5.5
2.7
2.3
-0.6
8.6
3.4
-8
-6
-4
-2
0
2
4
6
8
10
2020 2021 2022
GDP Private consumption Public consumption Investment
Domestic demand underpins growth
20
Source: Círculo de Empresarios based on OECD, 2021.

Europe: expected upturn in 2021 and 2022
After being the economy with the biggest GDP
decrease in 2020 (-11%), Spain will rebound in
2021 (+6.4%)
Spain
Specifically, in the Eurozone the fall in GDP was 6.6%,
but forecasts point to an increase of 4.4% in 2021
and 3.8% in 2022
Eurozone
Its GDP will grow at levels above 5% in 2021 and
2022, after falling 9.9% in 2020
The UK
21

Europe uneven recovery
Differences in growth rates among countries can be explained by the differential impact of the pandemic and structural
factors, especially those related to the configuration of the productive model
In Q1 2021, negative growth rates remained (except in France) as a
result of the instability caused by the epidemiological situation
In the Eurozone, the contribution to growth of private consumption
and investment remains negative
22
Source: Círculo de Empresarios based on Eurostat, 2021.
pp
-25
-20
-15
-10
-5
0
5
Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021
EU-27 Eurozone Germany Spain France Italy
-16
-14
-12
-10
-8
-6
-4
-2
0
2
Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021
Public consumption Private consumption Investment Eurozone

Eurozone improvement in activity and expectations
The improvement in the health situation and progress with the vaccination program has bolstered economic recovery
Source: Círculo de Empresarios based on Markit and European Commission, 2021.
The economic sentiment indicator for the Eurozone has reached its
highest level in three years
Manufacturing activity has accelerated to historic maximums, and
that of services has reached its highest level in three years
Score ≥ expansion
23
63.1
55.2
0
10
20
30
40
50
60
70
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Manufacturing PMI Services PMI
60
70
80
90
100
110
120
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Eurozone Germany Spain France

Germany: interrupted recovery
The successive waves of Covid-19 have delayed recovery
Source: Círculo de Empresarios based on Statista, Eurostat and OCDE, 2021.
Manufacturing has increased at a steady rate, boosted by
the increase in global demand, while services and
construction have fallen behind
Business climate (Ifo)
59.6 % GDP 69,9 % GDP
Expansionary fiscal policy is sustaining growth
+1.5%GDP
2019 2020 2021
(forecasts OECD)
Public debt 73.8 % GDP
Public surplus
(+)/ deficit (-)
-4.2%GDP -4.5%GDP
24
-2.2
-11.2
-3.8
-3.3
-3.1
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
-12
-10
-8
-6
-4
-2
0
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021
New cases by quarter
% year-on-year
change
GDP Covid cases (right cases)
-50
-40
-30
-20
-10
0
10
20
30
40
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
Services Manufacturing Construction

OECD forecasts
France and Italy: economic recovery
In France, activity will regain significant momentum in
the second quarter, and GDP will grow 5.8% in 2021
In Italy, GDP will grow 4.2% in 2021, boosted by
investment, exports and manufacturing
Investment and public consumption will contribute
positively to growth in Q1 2021
-30
-25
-20
-15
-10
-5
0
5
10
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021
Public consumption Private consumption
Investment Exports of goods and services
Imports of goods and services GDP
Spending of savings accumulated since the start of the pandemic
will boost private consumption, and the fiscal stimulus measures
will remain
25
Source: Círculo de Empresarios based on OECD, 2021.
13
15
17
19
21
23
25
27
29
80
85
90
95
100
105
110
Q4
2019
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Private consumption Real GDP
Real public spending Households savings (right axis)

The UK: record level of public debt
Although in April the IMF forecast 5.3% growth for the economy in 2021, the OECD has raised that to 7.2%, boosted
mainly by consumption in light of the easing of restrictions as a result of the rapid progress of the vaccination program
75
80
85
90
95
100
105
Q4
2019
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Real GDP Private consumption Private consumption
OCDE forecasts
Q4 2019 = 100
The fiscal measures adopted to soften the effects of the crisis have
increased debt to the highest levels in decades
0
20
40
60
80
100
120
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
Gross debt (right axis) Public surplus (+)/ deficit (-)
% GDP
26

Summary
Economic situation
2021 has started with a high degree of uncertainly in light of the
evolution of the health and economic situation as a result of the
Covid-19 pandemic. The continuity of the movement and activity
restrictions due to the fourth wave of the pandemic and the mutation
of the virus into more contagious and even lethal variants have
delayed the start of the economic recovery.
However, the accelerated rate of the vaccination program, the
improvement in confidence and the arrival of European funds (NGEU)
has allowed the recovery to gain in intensity.
In this context, after the 10.8% decrease in GDP in 2020, the main
national and international organizations forecast recovery to pre-
crisis levels as of 2022.
Receipt of the European recovery funds, their optimal allocation, and
efficient implementation, together with the completion of the
necessary structural reforms will be essential for consolidating
recovery. All this is against a background in which the main
imbalances of the Spanish economy have worsened: the high levels
of public debt and deficit, and the high rates or unemployment,
especially among the young.
Political, economic and
health-related uncertainty
Recovery
European funds
Structural reforms
1
2
3
4
28

1
2
3
4
The transparent and efficient allocation of the European recovery
funds
Fiscal consolidation and sustainability of the welfare state
Implementation of the necessary structural reforms to achieve a
competitive, sustainable and inclusive economic model
Digital transformation and improvement of the education and
training system
SOLID
RECOVERY
Chellenges for the Spanish economy
Against a background of the destruction of employment and the business fabric as a result of the impact of the pandemic
29

2021 2022 2023
Goverment 6.5 7.0 3.5
IMF 6.4 4.7 2.3
OECD 5.9 6.3 …
European Commission 5.9 6.8 …
Forecasts: a return to pre-Covid levels in 2022
-10.8%
2020
6.2%
2021
5.8%
2022
1.8%
2023
Source: Círculo de Empresarios based on IMF, Spanish Government, Bank of Spain, European Commission and OECD, 2021.
Bank
of Spain
(June 2021)
2020=100
30
The Bank of Spain has revised its previsions upward as a result of the improved epidemiological and economic situation, and the better-than-expected
impact of the NGEU funds
90
92
94
96
98
100
102
104
106
108
110
2019 2020 2021 2022 2023
BoE Average other organizations

Health situation: Covid-19 incidence and the level of vaccination
Source: Círculo de Empresarios based on Ministry of Health, 2021.
31
0
5000
10000
15000
20000
25000
30000
35000
40000
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Covid-19 transmission is at Jul/Aug 2020 levels
Nº of daily cases; moving 7-day average
50% of the Spanish population has had at least one dose of a
vaccine, and more than 30% have been fully vaccinated
50.1
31.5
0
10
20
30
40
50
60
4-Jan
11-Jan
18-Jan
25-Jan
1-Feb
8-Feb
15-Feb
22-Feb
1-Mar
8-Mar
15-Mar
22-Mar
29-Mar
5-Apr
12-Apr
19-Apr
26-Apr
3-May
10-May
17-May
24-May
31-May
7-Jun
14-Jun
21-Jun
% population with at least one dose % population fully vaccinated

3%
total ▲ 2.7% year-on-year
Agriculture
20.8%
total
Construction ▼ 10.1% year-on-year
Industry and construction
67.2%
total ▼ 5.1% year-on-year
Services
GDP Q1 2021 marked by uncertainty
GDP decreased 4.3% year-on-year and 0.5% quarterly
Source: Círculo de Empresarios based on INE and Bank of Spain, 2021.
By sectors
Uncertainty continues at the start of the year, delaying the start of the recovery in Q1: a deterioration in the epidemiological situation and a
delay in the vaccination program, the exit of the UK from the EU, a concurrence of adverse weather events, political instability and an
increase in energy costs. In Q2 2021, the Bank of Spain forecasts a quarterly increase of 2.2% in light of the improved health situation
- Exports: -10,7%
- Imports: -5,2%
External demand
▼ 4% year-on-year
Gross capital
formation
Domestic consumption
▼ 1.7% year-on-year
• Households: -3.5%
• PPAA: +3,2%
Industry ▲ 0.9% year-on-year
% year-on-year change and contribution to GDP (pp)
-21.6
-4.2
-25
-20
-15
-10
-5
0
5
Q1
2008
Q3
2008
Q1
2009
Q3
2009
Q1
2020
Q3
2020
Q1
2011
Q3
2011
Q1
2012
Q3
2012
Q1
2013
Q3
2013
Q1
2014
Q3
2014
Q1
2015
Q3
2015
Q1
2016
Q3
2016
Q1
2017
Q3
2017
Q1
2018
Q3
2018
Q1
2019
Q3
2019
Q1
2020
Q3
2020
Q1
2021
GDP (%) Domestic demand (pp) External demand (pp)
32

Household behavioral patterns
The decrease in spending on non-durable goods and services
since the start of the pandemic has been more intense than
that observed with regard to durable goods, in contrast to
previous crises
Households have increased their savings substantially during the
pandemic, the spending of which could energize the recovery
Accumulated increase in 2020 in % GDP
-40
-30
-20
-10
0
10
20
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
Households spending
Consumption of durable goods
Consumption of non-durable goods and services
4.5
5.4
0
1
2
3
4
5
6
Eurozone Spain
Compulsory Precautionary Other Increase of households savings
33
Source: Círculo de Empresarios based on Bank of Spain 2021.

85.7
49.9
60.7
48.5
63.1
55.7
77.8
89
40
45
50
55
60
65
70
75
80
85
90
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Improved expectations due to advances in the vaccination program
In May, the manufacturing PMI registered its highest level in 23
years, and that of services was the highest since August 2015
Source: Círculo de Empresarios based on Markit and CIS, 2021.
The Consumer Confidence Index maintains its upward trend and is at
3.3 pp above its pre-crisis figure
> 50: activity growth > 100: consumer positive perception
34
30.8
59.4
7.1
59.4
5
10
15
20
25
30
35
40
45
50
55
60
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Manufacturing PMI Services PMI

+14.2%
-34.5
48.2
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
-31
19.6
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Year-on-year % increase
Industrial sector
11.2%
Jan-Apr 2021
Cantabria
18.4 %
Castile and Leon
14.9 %
Canary I.
3.2 %
Industrial Production Index
By destination of goods (Jan-Apr)
+31.5%
Durable goods
By regions
Retail
9.2%
18.6%
Service stations
-2%
Food
20.3%
Rest
0.4%
Canary I.
10%
Cantabria
15.2%
Madrid
Products (Jan-May)
Jan-May 2021 Turnover
By regions
General increase until May 2021
Favorable evolution of industrial and commercial activity
% year-on-year
Intermediate
goods
+18.1%
Capital goods
+5.2%
Energy
+4.7%
Non-durable
goods
Source: Círculo de Empresarios based on INE, 2021.
% year-on-year
35
Galicia
14.9 % 2.6%
Extremadura
Year-on-year % increase

Employment and unemployment in Q1 2021
The rate of unemployment has reduced slightly as a result of the
decrease in the workforce and unemployment, despite all the job
destruction
% year-on-year change and % labour force
Unemployment rate < average Spain (15.98%)
Unemployment rate > average Spain (15.98%)
Unemployment rate by regions
11%
11.5%
11.9%
11.9%
12.1%
12,2%
12.6% 12.9%
13%
14.1%
16.4%
16.5%
17.4%
18.9%
22.5%
22.2%
25.4%
14.4 15.3 16.3 16.1 16
18.1
36.2
20.1 19.7
-6
0
6
12
18
24
30
36
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021
Unemployment rate Rate of effective unemployment*
Active population Employed
Unemployed
* Rate of effective unemployment (the unemployed and salaried employees on furlough +
freelancers who are unable to work) / workforce. From Q1 2021, It is not possible to calculate
the rate because the EPA (the Spanish Labor Force Survey) does not provide data on workers
affected by a reduction in working hours through the furlough scheme
36
Source: Círculo de Empresarios based on INE and Bank of Spain 2021.

Moderate recovery of the job market
Source: Círculo de Empresarios based on Ministry of Labour and Social Economy, Ministry of Inclusion, Social Security and Migrations and Bank of Spain, 2021.
In June 2021, unemployment fell for the second consecutive month to
3.61 million unemployed people (-6.4% year-on-year, its record drop).
The number of those registered with the Social Security continues to
improve (4.7%) and is at 19.27 million
The use of the furlough scheme by companies has significantly
slowed down the rise in unemployment
% change compared to Feb. 2020
5.1%
total
Agriculture 15.7%
total
Industry
and construction
69.9%
total
Services
Unemployment by sectors June 2021
9.3%
total
Without
previous job
37
-25
-20
-15
-10
-5
0
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Total affiliation Labour force adjustment plan Effective affiliation
-6,4
4.7
-10
-5
0
5
10
15
20
25
30
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Unemployed Affiliates

1,389.3
1100
1150
1200
1250
1300
1350
1400
Jan-
18
Apr-
18
Jul-
18
Oct-
18
Jan-
19
Apr-
19
Jul-
19
Oct-
19
Jan-
20
Apr-
20
Jul-
20
Oct-
20
Jan-
21
Apr-
21
Bn €
≈125
% GDP
Increase in public debt and deficit
Public debt
April 2021
12.5% year-on-year
* FROB, FGD or SAREB,…
Public deficit
Until May 2021
% GDP
1.14
Central Government deficit
Source: Círculo de Empresarios based on IGAE and Bank of Spain, 2021 38
-400
-200
0
200
400
600
800
1000
1200
1400
Total
Central
gov.
Agencies
Regions
Local
Entities
Social
Security
Consolidation
Apr- 20 Apr- 21
Bn €
12.5
9.4
24.2
55.1
3.1
-6.3
-20 30 80 130
Total
Central gov.
Agencies*
Social
Security
Regions
Local
Entities
% year-on-year
-30628
-100000
-90000
-80000
-70000
-60000
-50000
-40000
-30000
-20000
-10000
0
Jan.
Feb,
Mar.
Apr.
May.
Jun.
Jul.
Aug.
Sep.
Oct.
Nov.
Dec.
2019 2020 2021
2.53
% GDP
Million €

Deficit of Social Security funds in May 2021
Source: Círculo de Empresarios based on Ministry of Inclusion, Social Security and Migrations, 2021.
Revenues
Expenditures
Total non-financial revenues 81.6%
SOCIAL
CONTRIBUTIONS
66,396.7M€
Total non-financial expenditures
73.1%
PENSIONS
6.2%
year-on-year
17.7%
CURRENT
TRANSFERS
20.8%
year-on-year
3.1%
year-on-year
13.2%
SUBS. AND OTHER
PROVISIONS
11.2%
year-on-year
Until May 2021, the deficit of Social Security funds was
1,142.32 million € (0.09% GDP), compared to 2,749.8 M€
during the same period in 2020
Millions €
39
8.5%
year-on-year
5.6%
year-on-year
65,254.4M€
--2,749.8
-1,142.3
Jan-May 20 Jan-May 21

0
2.2
2.7
2.6
0.2
0.2
2
-2
-1
0
1
2
3
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Spain CPI Spain Core inflation
Spain HICP Eurozone HICP
Price hike stronger than in the Eurozone
Since April, the Spanish HICP exceeds that of the Eurozone for the first
time since Sep. 18
The escalation in 5 tenths of CPI in May is mainly due
to the the increase of fuel prices used in transport.
The June annual CPI flash estimate is 2.6%
May. and Jun. 21
The highest
spreads
general-core CPI
since Aug. 86
40
May. 21
The highest rate
since Feb. 17
Contribution to the annual CPI change in May 2021 (pp)
0.255
0.123
0.103
0.045
0.004
0.002
0
-0.001
-0.004
-0.010
-0.018
-0.023
Transport
Leisure and culture
Food and non-alcoholic beverages
Housing
Communications
Household goods
Education
Medicine
Alcoholic beverages and tobacco
Clothing and footwear
Other goods and services
Hotels, cafés and restaurants

year-on-year increase
Exports
16.9%
Jan-Apr 2021
21.5 % 22.9 %
Exports by destination
61.6%
EU-27 19.4%
Food, beverage
and tobacco
19.5%
Capital
goods
15.9%
Chemicals
21.8%
Capital
goods
18.4%
Chemicals
11.6%
Automotive
sector
By sectors
Imports
Goods exports return to positive values
54.2%
Eurozone
38.4%
Extra-EU
Source: Círculo de Empresarios based on Ministry of Industry, Trade and Tourism, 2021.
98.1 bn€
31.7
-6.1
-17.1 -50.3
-60
-50
-40
-30
-20
-10
0
10
20
Jan-Apr 2018 Jan-Apr 2019 Jan-Apr 2020 Jan-Apr 2021
%
year-on-year
change
Deficit Exports Imports
Imports
10.3%
Jan-Apr 2021
-4.6 bn€
Year-on-year change
10.3 %
% total
Exports
% total
% total
41
102.7 bn€
year-on-year increase

year-on-year
International tourist arrivals
-69.7%
Until May 2021
Tourism still pending the arrival of the recovery
3,203,033 tourists
year-on-year
Tourist expenditure
-71.5%
Until May 2021
1.046 € per tourist
3.3 bn€ total
5.8%
year-on-year
42
Source: Círculo de Empresarios based on Ministry of Industry, Trade and Tourism, 2021.
29.3
10.6
3.2
0
10
20
30
40
50
60
70
80
90
Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Million
tourists
2019 2020 2021
30.6
11.7
3.3
0
10
20
30
40
50
60
70
80
90
100
Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Bn
€
2019 2020 2021

Business creation picks up again
The creation and dissolution of businesses has been picking up,
reaching 40% and 21% year-on-year, respectively
Number of companies and % year-on-year change (right axis)
Jan-Apr 2021 Business creation by Autonomous Regions
% of the total created in Jan-Apr 2021
> 10% of the total business creation
3.1%
0.9%
0.9%
0.4%
1.9%
23.2%
2.9% 18.6%
4%
1.2%
2.8%
11.6%
3%
3.4%
17.7%
1.2%
3.1%
43
-30
-20
-10
0
10
20
30
40
0
5000
10000
15000
20000
25000
30000
35000
40000
Jan-Apr 20 May-Aug 20 Sep-Dec 20 Jan-Apr 21
Created Dissolved
Creation % year-on-year change (right axis) Dissolution % year-on-year change (right axis)

Competitiveness takes a blow
44
Spain has fallen three positions to 39th out of 64 countries in the IMD 2021 World Competitiveness Ranking, its worst position since 2014
The deterioration of economic
performance is due to Spain lagging
behind in:
• Youth unemployment (62nd)
• Real GDP per capita growth
(62nd)
• Resilience of the economy (56th)
The main challenges to the Spanish economy are related to the strengthening of the business sector, improving the business climate to
attract investment, boosting digitization and scientific research, and improving worker employability
Top 3
Switzerland
Sweden
Denmark
Spain
25
30
35
40
45
50
2017 2018 2019 2020 2021
Overall rank Economic performance Government efficiency
Business efficiency Infrastructure
Spain has suffered a significant deterioration in the economic performance
(from 31st to 42nd) and governmental efficiency (from 44th to 49th)
The fall in governmental efficiency
reflects the negative perception of
the public sector, especially in
public finances, unemployment
legislation, business creation and
the adaptability of government
policies
1
39
2
3
Source: Círculo de Empresarios based on IMD, 2021.

MARKETS

0.1
2
1.5
0.1
5
2.5
-1
0
1
2
3
4
5
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
1
year
2
years
3
years
5
years
Eurozone USA
Inflationary pressures Are they temporary?
Annual inflation in the US and in the Eurozone
Source: Círculo de Empresarios based on Statista and Eurostat, 2021.
Inflation is picking up on both sides of the Atlantic. The expansionary policies and increases in the price of raw materials, food
and energy have pushed prices up, although the market estimates are that this evolution will be temporary, and that inflation
will stabilize at around 2-3% in the medium-term
46
Inflation expectations
Increase in raw material prices

Increase in the price of the crude oil
The price of Brent crude oil climbed above 60 US$
35
45
55
65
75
85
95
105
115
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
OPEC West Texas Intermediate (WTI) Brent
Oil crisis
2015-2016
Covid-19
pandemic
Crude oil prices returned to 2019 levels after the decreases in 2020 caused by the fall in demand, oversupply and poor
expectations as a result of the outbreak of the pandemic
Yearly average price of a barrel of crude in US$
2020
41.96
Brent 63.19
X 1.5
41.47
OPEC 62.03
X 1.5
39.16
WTI X 1.5 60.05
Jan-May 2021
47

Stock markets: upward trend with differentiated rates
The MSCI World stock market index has reached historic
maximums
Markets continue recovering as the anti Covid-19 vaccination program advances, and as expectations and the health
situation improves. The European recovery plan and the Fed’s expansionary policies have also positively influenced this
development
Differentiated rates of recovery can be observed
1800
2000
2200
2400
2600
2800
3000
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
+60.6%
50
60
70
80
90
100
110
120
130
140
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
IBEX S&P 500
Eurostoxx-50 MSCI emerging economies
MSCI emerging Asia MSCI Latam
January 2020 = 100
Price US$
48
Source: Círculo de Empresarios based on Statista and MSCI, 2021.

Bond markets: calm returns after the interest rate hikes
Risk premiums of the European periphery evolved in a
similar manner Risk premiums of the European periphery
evolved in a similar manner
The increase in inflation caused by a hike in interest rates for US and German sovereign debt, but the situation has
returned to normal with the announcements by the Fed and the ECB of their intention to maintain an accommodative
monetary policy on considering that the increase in inflation will be temporary
Upturn and subsequent correction in the yield of
the 10-year bond
-100
400
900
1400
1900
2400
11.06.2021
07.06.2021
01.06.2021
26.05.2021
20.05.2021
14.05.2021
10.05.2021
04.05.2021
28.04.2021
22.04.2021
16.04.2021
12.04.2021
06.04.2021
30.03.2021
24.03.2021
18.03.2021
12.03.2021
08.03.2021
02.03.2021
24.02.2021
18.02.2021
12.02.2021
08.02.2021
02.02.2021
27.01.2021
21.01.2021
15.01.2021
11.01.2021
05.01.2021
US Germany Spain Italy Portugal UK
50
60
70
80
90
100
110
120
130
06.06.2021
30.05.2021
23.05.2021
16.05.2021
09.05.2021
02.05.2021
25.04.2021
18.04.2021
11.04.2021
04.04.2021
28.03.2021
21.03.2021
14.03.2021
07.03.2021
28.02.2021
21.02.2021
14.02.2021
07.02.2021
31.01.2021
24.01.2021
17.01.2021
10.01.2021
03.01.2021
Spain Italy
49

Global and Spanish economic perspectives Q2 2021

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