Spain's economy in the eyes of the general public is subject to stereotypes associated with the Spanish coast, comfortable sunbeds on it, warm sea and loyal consulates that issue visas to suffering tourists. And Gaudí… Wonderful tourist country in the south of Europe, what would they do without us…
But not so. Spain will live without tourists. The point is its powerful industrial economy with serious technologies, diversified agriculture, reliable banking system and other unexpected things that many are not even aware of. The tourism industry is of course also important. But it is not she who rules the general welfare…
The main problems of the modern Spanish economy can be listed quickly and on the fingers, there are only three of them: unemployment, inflation and high public debt, many times higher than annual GDP, more on that below.
How did it all start?
The history of the Spanish economy is unusual, uneven and extremely interesting. In short, this is history.about the rapid and effective "change shoes" of the economy of the whole country in response to political changes. Let's take the period starting from the end of the Second World War - a political and economic milestone for almost all European countries. Spain then turned out to be among the real outcasts - it was in economic isolation. Considering the fact that Spain was a member of the "Axis countries" - the Nazi coalition, it did not receive any material or technological support, unlike its European neighbors, who received significant subsidies under the Marshall Plan.
Spain is a proud country with a proud government - together they decided to go their own way. The features of the Spanish economy of that time were widespread cases of government officials intervening in private business - this was an extremely high degree of state control in almost all sectors of the economy. Realizing in the end that such a policy in the economy would not lead to good, Spain decided in the 60s to carry out economic reforms. As a result of this, the first brainchild of the new market economy of Spain, the Spanish Miracle, was born. So they themselves called their famous stabilization plan. At first, many laughed at the name: “What kind of economy is in Spain, such a miracle.” Then they stopped laughing: in front of the astonished public, Spain overtook all countries in the world in terms of economic growth. This growth rate continued until 1974, when a severe energy crisis hit all countries. He did not bypass Spain, with its deep dependence on importedenergy carriers.
Spain overcame the crisis faster than others in Europe, but from that moment two problems of the Spanish economy began to appear - unemployment and its faithful companion inflation unfolded in all its glory. In general, there were no surprises - everyone has such problems. But this couple will no longer lag behind the country: the Spanish economy will live side by side with it. In other countries, too, there is inflation and unemployment, but not on such a scale, and not for so long. A 22 percent unemployment rate would shock any other country. But not Spain, which has been living with such numbers for a long time. Perhaps this Olympian calm is explained by a significant shadow sector of the economy, but even this does not help to reduce inflation. The “sweet couple” of Spanish economic problems was ringed by the huge public debt that joined it. A debt that is amazing in its magnitude and many times greater than the country's annual GDP (the United States has the largest debt, everyone knows this, but it is equal to the country's annual GDP, which indicates the high solvency of the United States). In the Spanish performance, the duty is simply cosmic, and it is not known what the Spaniards are going to do with it next.
Despite its "eternal" problem trio, Spain has managed to become one of the most highly developed countries in Europe with a developed industry in combination with a strong tourism sector. The development of the economy in Spain was non-standard. Interestingly, Spain ranks highly as a manufacturer of machine tools and industrial equipment, metalworking products,organic and inorganic chemistry, shoes, car accessories - in all of the above categories, it has high places in the top ten countries of the world. But in the field of IT, Spain is much lower - it is only in the third ten countries. Let's call this fact another characteristic of the Spanish economy.
Orange European Champion
The absolute hits of today's Spanish agriculture are olives and olive oil, citrus fruits, grapes and, of course, very good quality grape wine.
If all of the above are well-known items of Spanish agricultural income, then not everyone knows about the powerful and developed fisheries. Meanwhile, Spain is in the first "fishing" world ten. If fruits, vegetables and fish are in excess, and they are successfully exported, then grain and livestock products have to be purchased. There is a complete "change of shoes" of the whole industry in a short period of time. Such a quick and efficient reset can also be attributed to the features of the Spanish economy. Judge for yourself, agriculture was originally a core sector of the Spanish national economy. Until the 50s of the twentieth century, Spain was a purely agricultural country, half of its population was employed in this industry. The main products were barley and wheat. To date, agriculture has not only drastically reduced its share in the overall Spanish economic "pie", but has also radically changed its specialization - another illustration of the development of the economy in Spain.
Fruit specialization by region is clearly divided, as a result of which large and very narrow “fruit” specialists live in different areas: oranges and other citrus fruits are grown in Andalusia and Valencia. Valencia and the surrounding suburbs also specialize in almonds and pomegranates. Pears and apples are the lot of the northern territories, while the famous Spanish tomatoes are produced in Alicante and Murcia. The Canary Islands grow mangoes, bananas and avocados in huge quantities.
As for the wine industry, the vineyards are located throughout Spain, except for the northern regions, which is quite understandable. The main and most valuable grape varieties grow in Andalusia, Castile and La Rioja. Spain is the largest wine producer, the third largest in the world. The average annual volume of wine is huge for such a small country - about four hectoliters. The quality of the Spanish wine is also okay.
And now the "rice" news: rice in Spain is not just grown, but has one of the highest yields in the world. With such a local abundance of food, Spain would still not be able to live offline (as in a submarine). It imports wheat, some fish, livestock products. And it is true: with excellent agricultural integration in the EU countries, it is possible to produce what is best grown or caught. There is a positive impact of European integration on the development of the Spanish economy. A lively import-export process with approximately equal volumes of products in both directions is an ideal picture of the modern economicintegration.
Industry in the Spanish economy
We already know about the stabilization plan called the "Spanish miracle", thanks to which Spain really got on its industrial feet and turned from a European agricultural province into a powerful industrial state with a solid place for Spain in the world economy. At the same time, people began to come to the Spanish coast to relax and lie on the beach, and a stable and profitable tourism industry was added to economic reforms.
Mining is perhaps the only sector of the Spanish economy where little has changed. This is understandable: minerals for that and minerals. They have not gone away and now give Spain the right to be called a world leader, for example, in the extraction of mercury or pyrites. Uranium ore, silver, quartz, gold and much more … One thing is bad - this "lot of things" is actually very small - at least in order to become a backbone sector of the Spanish economy as a country with a well-developed industrial sector. Spain even has its own oil, but it is so small that it covers only 10% of its needs - about 30 million tons annually. If in metal-bearing ores Spain firmly holds first place in Europe and ninth in the world, then in terms of energy resources it is only an offensive fortieth place in the world.
The Spanish economy is also characterized by a large presence of foreign capital. Companies from France, Great Britain, Switzerland, Germany, including, of course, American corporations (where without them?), own almost halfmetallurgical and engineering enterprises. The local oligarchy is also well represented - these are eight large financial groups that are engaged in both industry and banking.
A significant part of the economy is occupied by the port industry: in Bilbao and Barcelona, special oil ports in Tarragona, Algeciras and Santa Cruz de Tenerife, a special coal port in Gijón.
The transport road network brings together a dozen of magnificent new generation highways that connect almost all regions and cities of Spain. Special high-speed roads are laid along two sea coasts - both from the Atlantic Ocean and from the Mediterranean Sea.
The railway history of this country is rich in events and achievements. Spanish Railways is 170 years old, one of the most "deserved" roads in Europe.
This fact does not prevent Spain from having excellent modern electrified railways with high capacity and high-speed trains. Spain not only launches new trains, it also builds them. The famous Talgo trains can be found all over the world.
Spanish industry: heavy and light
Engineering in Spain is really serious. This is first of all. shipbuilding (a centuries-old maritime power is no joke) with huge old shipyards in the north of the country in Bilbao, Gijon and Santander.
There are also new shipyards built in the northwest in Vigo, El Ferrol and oneast in Barcelona, Valencia and Cartagena. The south of Spain has never been an industrial region, but new shipyards have appeared there too - in Seville and Cadiz. Such branches of the Spanish economy as shipbuilding are the subject of special attention of the government, no matter what political forces are at the helm. Traditions are traditions.
Automotive industry in the country has specific features. Spain's automotive industrial economy is characterized by many car manufacturing centers based in cities across the country, from Barcelona to Seville. But they are all owned by foreign companies and brands, such as the Volkswagen concern. In total, there are 17 assembly plants in the country, which bring the country a very good income and generate about 6% of GDP. Spain makes everything: buses, cars of all types, including vans and SUVs, tractors, heavy and light trucks, and even wheeled tractors. The largest volumes are carried out by the factories of Renault, Ford, Opel, Peugeot companies. There is also its own national brand Seat.
Export of manufactured cars is an extremely important article of the total national export, it accounts for 16% of its annual volume. The profile "automobile" cities with large factories are as follows: Madrid, Vigo, Pamplona, Barcelona. The Spanish government has big plans for building electric vehicles. But with this you need to wait and see - it would not work, as with the solarenergy…
Spain is strong in the production of machine tools and industrial equipment for light and food industries. Building materials, as well as equipment for the production of building materials, are also among the strategic sectors of the Spanish industry.
Light industry in Spain has a "good heredity". The descendants of great masters in the production of shoes and fabrics live here, which resulted in a developed textile industry with the highest quality products. There is no need to talk about Spanish shoes - they have one of the highest “shoe” ratings in the world, and Spain holds a four percent share of world shoe exports.
Free economic zones
There are four such zones in total, they operate with tax, customs and various economic benefits. All of them are located in major seaport cities: Barcelona, Cadiz and Vigo, on the famous Canary Islands. The most famous and largest of them is the FEZ Barcelona with its branched structure:
- industrial landfill;
- "free" warehouse;
- free trade zone.
The industrial site of Barcelona is located close to the seaport and airport. It is a powerful communication hub between the highways of Spain and Europe, it has a special freight station with a railway container terminal.
In Cadiz, the free trade zone has been functioning for a long time - since 1929. Herthe purpose, as well as all the functionality, is aimed at one thing - export. The Atlantic coast is maritime links with all countries of the world. The FEZ of Cadiz includes:
- international mall;
- office center;
- storage areas;
- industrial and port areas;
- terminal for containers - refrigerators;
- warehouses with powerful industrial refrigerators.
The FEZ in Cadiz serves as a customs territory of the European Union, which provides customs and tax benefits for goods from third countries in the form of exemption from:
- import duties while the goods are in the zone;
- special import taxes into the zone;
- VAT with its refund upon importation into the zone of goods and the production of services for the processing of these goods;
- exemption from EU trade policy rules;
- legal import of any product with an unlimited period of its stay in the zone.
Both the large number and excellent technical equipment of free economic zones are explained by the diverse structure of the Spanish economy and its high integration into the global economic process.
Spanish energy
As noted above, Spain's economic performance depends on oil prices. The reason for this is the scourge of most European countries - poverty in terms of minerals. There is something in Spain, but it is so small that the amount of reserves plays practically no role in the development of the country's economy. There is a complete dependence of Spain in the worldeconomy from foreign energy exports.
"There is a blessing in disguise" - this is the most accurate illustration of the country's energy dependence, which has resulted in a magnificent and promising industry using high technologies. “A lot of sun” + “little coal”=development of alternative energy and, in particular, solar panels and stations. Spanish solar energy has an interesting and revealing history.
Everyone knows that Spain is very hot and full of sun. It is clear that in such a climate, God himself ordered to engage in alternative energy in the form of solar stations. What the Spaniards did back in the 90s. The European Union took an active part in this initiative - it was very interested in the development of such an energy for the same reasons as Spain itself. The first stations worked on the principle of "photovoltaics" - the conversion of solar energy into electricity using photovoltaic cells. Everything was going great, the stations began to grow like mushrooms after the rain - in gigantic areas, with batteries or mirror collectors of solar energy. Andalusia has the world's first 24-hour solar station.
Spanish socialists and hot Spanish sun
Unfortunately, there was some politics here: the then ruling socialists had a hand in the solar industry. They positioned themselves as ardent environmentalists and handed out generous cash incentives left and right to owners of private solar stations “to save nature”. As a result, these owners beganreceive state subsidies in the form of premiums in addition to income after the sale of electricity to consumers. For several years, they had up to 20% additional net income - just like that, "for beautiful eyes." It is clear that those who want to quickly and easily earn money have been drawn into the industry. Foreign capital also began to flow into the country with a powerful stream. Perhaps everything could have gone on like this, but in 2012 there was another energy crisis, against which state bonuses quickly ended. The authorities were forced to take a very unpopular and tough step: they set a very low ceiling on the income of solar companies: no more than 7.5% per year. Such figures with other severe restrictions were introduced as part of the Spanish energy reform.
Even with this vegetarian regime, “solar” incomes are covered by the state: new generation energy is still too expensive and beyond the reach of most residents. So the Spaniards hurried, even their hot sun does not help the new energy to be profitable. In pursuit, the socialists added problems to the energy sector in the form of a ban on the construction and use of nuclear power plants. So expensive foreign fuel is in use again. In general, the economy and politics of Spain constantly go side by side, and the impact of political regimes or reforms on the economy cannot be attributed to positive phenomena.
Banks
Spain can be proud of its banking system - it is one of the most stable in Europe and in the world. The main regulator is the Central Bank, in whose activities there is nothing “revolutionary”. AdvantageSpanish banks lies in several features:
- large foreign exchange reserves;
- high concentration of banking capital in general;
- a small number of credit offices;
- good development network of public savings banks (Franco's legacy);
- well-spread branches of private banks.
National banks with purely Spanish capital are leading in the financial markets. The first of these is the financial group Banco Santander Central Hispano, which is only 18 years old: the young age of the leading Spanish companies is also one of the characteristic features of this economy.
An unusual financial institution operates in Spain - Sareb. Many foreigners are interested in it, because it is through Sareb that most transactions for the purchase of Spanish real estate are offered. The fact is that this is not a bank, but a company to which banks transferred all toxic assets in the form of hung apartments, houses and other types of real estate during the crisis. Sareb is due to sell this property by 2027, which it does – selling in bulk at a discounted price to investment funds and individuals – no longer at wholesale prices. This approach is criticized by many, but the economy and politics in Spain continue to be closely linked - no one can cancel the government's decisions.
Forecasts and prospects
In 2018, the Spanish economy has very good prospects. Fitch Ratings predicts further growth, which will be +3.1%. The digital corridor for 2019-2020 is set at +2.5% and +2.2%. Projected growth rates may be higher than inFrance, Germany and Italy.
Spain will look more than decent at the world level, the average level of its development indicators is on par with the world average. The order is expected and with the main indicator - Spain's GDP, it is expected to grow two points above the average.
Not without risks: high oil prices and lower job growth could lead to falling incomes. But in general, positive forecasts significantly prevail over negative ones.
Facts and Figures
- Seven years ago, Spanish labor laws were a nightmare for business owners and potential investors. It was almost impossible to fire Spanish employees, high severance pay was mandatory, which did not depend on the quality of the employee’s work and the reasons for his dismissal from the company. The same wages were set from above, the hiring of newcomers was also severely limited: business owners were obliged to hire not those who were needed, but those who stood in social lines. The unions were atrocious and vehemently resisted any attempt to cut government spending. Fortunately, Parliament approved the reform of the labor market, which immediately had a positive impact on the investment climate and the overall dynamics of the Spanish economy.
- The ratio of imports and exports in Spain is ideal - how much they sell abroad, exactly how much they buy.
- Spain is second only to France in terms of the number of tourists coming to the country.
- There are seventeen regions in Spain. Fifteen of them are on the mainland, twothe rest are two groups of islands: Balearic and Canary.
- In terms of area, Spain ranks third in Europe after Ukraine and France. Well, in the world - only the 52nd…
- Regions of Spain are very different from each other in music, cuisine, customs, and even language in some cases. This is the legacy of the Spanish Empire and the "marine profile" of the country with many port cities: who just did not live here…
- The total length of Spanish beaches is more than 8000 km.
- Spain is the European banana monopolist, it is the only European country where bananas are grown.
- Ibiza brings Spain about 1500 million euros every summer.
