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Spain - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises

Introduction

Capital:: Madrid
Area:: 506 km2
Total Population:: 46.761
Annual growth rate:: 0.00%
Density:: 94.00/km2
Urban population:: 78%
Population of Madrid (5.300), Barcelona (3.890), Valencia (1.720), Sevilla (1.135), Bilbao (879)
Official language: Castilian (Spanish)
Other languages spoken: Some regions use their regional language for conducting business (Euskera, Catalan, Galician, Valencian). Other minor regional languages can be used: Bable, Aragonese, Aranese, Extremaduran.
Business language: Spanish.
English is rarely used but it is developing.
Ethnic Origins:: Spanish: 90%. Foreigners: 10% of which 13% are Moroccans, 11.7% Rumanians, 9.5% Ecuadorians, 7% British and 5.8% Colombians.
Beliefs: Catholics 77% (50% practicing); Muslims, Protestants, etc.: 3%; non believers: 19%.
Telephone codes:
To make a call from: 00
To make a call to: +34
Internet suffix:: .es
Type of State::
Kingdom. Constitutional monarchy based on a parliamentary democracy.
Power is highly decentralized; the autonomous communities have a high level of legislative, executive and fiscal autonomy (Basque country and Navarre, own taxes).
Type of economy::
High revenue country; Member of OECD
Economy based principally on agriculture, financial services and tourism; Unemployment rate among the highest in Europe

Economic overview

After undergoing a period of deep recession, Spain returned to positive growth in Q3 of 2013. However, the average growth numbers for the year were negative (-1.3%) and only sluggish growth is expected for 2014 (0.7% of the GDP). Recovery will be slow due to the high level of unemployment and tightened credit conditions which limit investment and consumption.

In 2013, the government continued introducing reforms to rebalance the state accounts and it was able to soften the austerity measures thanks to the EU's losening of its requirements in terms of deficit reduction (the goal was increased from 4.5% to 6.5% and Spain was given additional two years to reduce its budget under 3% by 2016). The country experienced an increase in competitiveness encouraged by the decreasing cost of workforce and investors became more confident, which resulted in lower interest rates on the sovereign debt. In late 2013, the government announced that it was closing down its assistance plan for banks since the last visit of the IMF inspectors came to the conclusion that the restructuring programme of the bank sector had had good results. To support this nascent economic recovery a number of reforms are due to be adopted, including and especially, of the pension system (abolishing indexation on inflation, revision of retirement age according to life expectancy), enterpreneuriship (standardisation of business creation rules and trade licensing, facilitating bureaucratic procedures and access to funding) and public spending (administrative reform). The debt has risen to 94% of the GDP and should reach nearly 99% of the GDP in 2014.

Spanish unemployment rate has fallen due to the decrease in active population and the creation of new temporary jobs, but still remains very high (25%). The crisis has had a negative impace on the living conditions generally.

Main industries

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.

Tourism represents Spain's largest source of income and the country has become the number two tourist destination in the world, thereby stimulating export of goods and services. The tertiary sector contributes to two thirds of the GDP.

Foreign trade overview

Trade represents nearly 60% of the Spanish GDP (WTO, average 2010-2012). In 2013, Spanish imports bottomed out and exports recovered (an increase of around 6% compared to 2012), driven by equipment goods, the automobile industry and tourism, the decrease in costs and the diversification of trading partners. Spain has reduced its trade deficit and this trend should continue in 2014.

The main trade partners are the countries of the European Union, France being the first destination of Spanish exports. France imports Spanish food products, cars, chemical and textile products. Spain also has good trade relations with the Maghreb countries.

FDI

After FDIs dried up due to the crisis in the eurozone, they recovered in 2013 thanks to the country becoming more competitive and increased confidence of investors. Spain remains one of the world's fifteen largest FDI receipients (UNCTAD 2013).

In terms of FDI appeal, the country’s strengths include: cultural 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 aspires to become one of the world's key research actors. To this end, it has developed the "Malaga Valley" project, whose promoters are hoping to construct the largest European research and innovation center dedicated to information and communication technologies.
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