International Trade in Spain

News Related to International Trade in Spain

Business outline for Spain

Main Industry Sectors

Agriculture contributes around 3% of the Spanish GDP. The country produces wheat, sugar beet, barley, tomatoes, olives, citrus fruits, grapes and cork. It is the world's largest producer of olive oil and the world's third largest producer of wine. It is the largest producer of lemons, oranges and strawberries. Spain has limited mineral resources.

The manufacturing industry is dominated by textiles, industrial food processing, iron and steel, naval machines and engineering. The new sectors such as relocation of the production of electronic components, information technology and telecommunications provide a high growth potential. In 2009, industrial production growth rate nevertheless fell by 10.2%.

Tourism represents Spain's largest source of income, having become the second tourist destination of the world and thereby stimulating export of goods and services. The tertiary sector contributes to 2/3 of the GDP.

Economic Overview

Spain has achieved an economic leap in the last two decades and has risen to be amongst 20 of the world's most significant economies. It registered annual GDP growth rates higher than 4% between 1997 and 2000 and thereafter a growth rate that is always higher than the average in the Euro zone due to consumption and to the real-estate "boom". Nevertheless, the growth factors, which were at the root of its economic growth have been weakened by the financial crisis, which touched the real-estate sector and weakened the banking system. In 2009, the GDP growth fell by 3.7%, putting an end to 16 subsequent years of positive economic growth.

The government's stimulus policies did not prevent a rise in unemployment, which increased to as high as 18% of the active population, the highest rate in the European Union in 2009. The labour market reform which came into operation in 2010 has nevertheless helped increase the productivity of the Spanish economy. Both the construction sector and to some extent consumption were hit by the economic crisis. Although inflation is showing a tendency towards stabilization, household consumption predictions 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 but by 61% in value.
In 2010, Spain turned towards a different economic model, freeing itself from real estate as its traditional growth factor and capitalizing on improved competitiveness and a higher added value on services. With an increase of 22.4% on its quarterly net profits, Spain's number one bank Santander reflects the country's ambition to resist the economic downturn. 

FDI in Figures

In twenty years, Spain has become the ninth global economic power thanks to its cheap workforce, the spectacular 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 as high-tech services. The country 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. In addition to this, Spain wants to become one of the world's key research actors. In order to fulfill these ambitions, it has recently developed the €śMalaga Valley€? project, which its sponsors hope will become the greatest European research and innovation center dedicated to information and communication technologies.

In 2009, Spain's 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 the UAE 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 country's 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.

FDI Government Measures

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 local investor. The CEE Council Directive no. 88/361/CEE dated June 24, 1988, concerning the free movement of capital between the residents of member States was adopted in the Spanish legislation by Law no. 18/1992 of July 1, 1992, and came into effect on July 4, 1992 and by Royal Decree 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 the investors residing outside an EU member country; it is the same for businesses manufacturing and selling arms. In the latter case, these restrictions also concern investors within the community.

Country Strong Points

The country's main strong points are flexibility and adaptability of economic operators and in the quality of life the country offers.

Country Weak Points

The country's weak points are the low productivity of its manpower, its weak competitiveness as well as a growing trade balance deficit. The complexity of the regulation system with regard to the 17 Autonomous Communities is also a hindrance to investment.

Foreign Trade Overview

Foreign trade has little impact on the country's GDP growth. The Spanish trade deficit worsened in 2009 and 2010. Although 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. Nevertheless, its burden decreased because of the drop in Brent future price and the increase in the production of renewable energy. Apart from food products (e.g.: fruits and vegetables) whose balance remains in surplus, there is a negative 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 destination of Spanish exports (19.2% in 2009). France imports Spanish food products, cars, chemical and textile products. Spain also has good trade relations with the Maghreb countries.