Sintas 1

Marta Sintas

Mr. Rudebusch

16 Mar 2018

The Economy of an Independent Catalonia

Catalonia is one of the most important Autonomous Communities of Spain (with a Gross

Domestic Product of 262,96 billion of dollars). In the hypothetical case of the arrival of an

agreement in the distribution of public debt between Catalonia and Spain it would be considered

under two possible options: divide the Spanish public debt according to the GDP1 of Catalonia or

according to the number of inhabitants living in Catalonia.

In order to analyze the final economy of Catalonia as an Independent country, it is

convenient to see the macroeconomic data that Catalonia has had in the last financial year. One

of the macroeconomic data that is necessary to analyze is the debt; the debt is the total financial

obligations incurred by the government of a nation. When it comes to seeing what debt would

belong to Catalonia, we have to subtract the debt from Catalonia from the total public debt of

Spain. At present, Spanish debt reaches 1,404,246 million dollars (98,3 % of the annual GDP)

while Catalan is 93,031 million (35.44% of GDP in Catalonia). Therefore, the debt without the

Catalan would be 1,311,215 million.

The distribution of the debt can be analyzed according to two criteria: the wealth of the

region or the number of habitants. In the event that the criteria is population-based, the

1
GDP is the wealth that is generated annually in an economic region.
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percentage of participation in Catalonia is 16%. On the other hand, the Catalan GDP on the total

would be slightly higher: 19%. In this way, respectively, the state debt to be distributed to

Catalonia according to the two options would be 169,319 million dollars (at 16%) and 200,587

million (at 19%). Finally, the final debt of an independent Catalonia would be this portion of

state debt added to the current from the Generalitat2 (approx. 165,184 million dollars). The result

would be that Catalonia should assume 302,655 million dollars or 341,328 million of dollars,

respectively according to these two criteria.

If compared to the current GDP of Catalonia, it would mean that this added debt accounts

for either 79.89% of GDP, if the distribution option is according to the population, or 94.65% if

the criteria is selected according to the wealth of the Autonomous Community. (USA total public

debt is a 103.76% (19,947,680.M of $)) .

2
The “Generalitat” is the institution under which the Spanish autonomous community of Catalonia is politically organised. It
consists of the Parliament of Catalonia, the President of the Generalitat de Catalunya, and the Executive Council of Catalonia.
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Most people think that if Catalonia split from Spain, it would be a very small country;

however, Catalonia’s population is more than seven and a half million, similar to Bulgaria or

Austria, putting it in the position number 15 of the European Union (in demographic terms). If

we focus on the Gross Domestic Product (GDP), Catalonia (262,380 million of dollars in 2017)

would be above Portugal (218,170), the Czech Republic (216,399), Greece (200,788), Finland

(252,787), and Romania (211,745). On the other hand, Denmark (325,387) would be situated

slightly above Catalonia. Catalonia would rank among the some of the most competitive

countries in Europe. Of course, it is important to remember that, as happens in all countries that

achieve the independence, independence would first be marked by an temporary economic

downturn.

GDP only measures the wealth generated by an economic region in a year and not the

level of welfare of its inhabitants. However, if the GDP per capita is measured (total wealth

divided by the inhabitants), it brings us closer to the reality that the population and Catalonia

would be a bit above Portugal, Czech Republic but bellow Andorra. France and UK. Although
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there are other instruments, such as the Gini index, which can give a more complete view after

analyzing this two variables I could get an idea of where Catalonia would be compare to the

other countries. In conclusion, Catalonia has all the fundamentals to be an economically viable

country, but whether or not it will succeed will depend as much as decisions made in the

Parliament of both countries as on those fundamentals.