Economic Analysis

Executive Summary
In order to sustain incomes while the economy is in hibernation,
extraordinary deficit spending has been the order of the day.
Spain’s economic freedom score is 69.9, making its economy the
39th freest in the 2021 Index. Spain has become the eurozone’s
fourth-largest economy. Spain’s diversified economy includes
manufacturing, financial services, pharmaceuticals, textiles and
apparel, footwear, chemicals, and a booming tourism industry.
Spain lags in development of business freedom compared to many
other countries, continuing a downward trend that began in 2014.
The duality of the labor market, composed of permanent workers
with full benefits and temporary workers with fewer benefits, is
an economic risk. According to the World Bank, subsidies and
transfers account for about two-thirds of the government’s annual
budget.

As a member of the EU, Spain has 45 preferential trade agreements

in force. The trade-weighted average tariff rate (common among EU
members) is 3 percent, with 639 EU-mandated nontariff measures in
force. Most sectors are open to foreign investment, and capital
movements have been liberalized. The financial sector’s overall
condition continues to improve. Use of banking services is nearly
universal in the adult population.

GDP in Spain measures the monetary value of production of final

goods and services in Spain over a given period (quarterly and
annual). Spain GDP per capita (GDP per citizen) is considered an
indicator of a country’s (Spain) standard of living.
Spain has one of Europe’s most diverse mining industries, which
produces most of the industrial minerals. Owing to the gold
reserve discoveries at the El Valle-Boinas and Carles deposits in
northern Spain, highly prospective geology, and the Rio Narcea
Belt, the country has attracted many foreign investors. Also, the
country’s skilled workforce, well-developed infrastructure, and
fiscal policies, and legislative framework have encouraged
foreign investment in its mineral industry.

Spain's dependence on tourism, a predominance of small businesses

with small margins and an over-reliance on temporary contracts
will delay the economic recovery. Today, shipping, fishing and
sea bound tourism remain vital contributors to national GDP.
Spain has the fourth-largest economy in the Eurozone, and the
country is the second-most popular tourist destination in the
world. Spain’s premier position in the construction and
transportation sectors has also enabled Spanish companies to be
on the front line for major infrastructure, railroad, and metro
projects throughout the country. The success of the larger
Spanish multinationals is gradually attracting the interest of
their service providers.

This provides information on employment, unemployment,

underemployment, hours of work, monthly household income,
duration of employment and duration of unemployment, discouraged
and occasional workers, industry, occupation, status in
employment (occupational category) and level of
education/qualifications. Employers and employees are free to
negotiate the terms and conditions of their employment
relationship. However, employees have various minimum rights
under the law, regardless of any contrary language in their
employment agreement.
After falling as a result of the financial crisis, Spanish FDIs
recovered in recent years due to an increase in competitiveness
and investor confidence in the country. Investments in Spain are
mainly oriented towards financial and insurance services, real
estate, manufacturing, scientific, professional, technical,
administrative support service activities, wholesale and retail
trade, transportation and storage, and the energy sector. The
Netherlands, Luxembourg, the United Kingdom, France, Germany and
Italy represent nearly 70% of the FDI stock of Spain.

A. Introduction

B. Population
According to the census in 2008, Spain had about
46,157,822 inhabitants. 505,992 square kilometers make up the
total surface area of this country. This translated to a
population density of about 91.4 people per square kilometer,
or 229 per square mile. The population density is lower than
that of most other Western European Countries. Except for
Madrid, the capital of Spain, the populous regions in the
Kingdom of Spain are along the coastline of the country.
Between 1846 and 1932 nearly five million Spaniards went
to the Americas. Only Britain, Italy, Austria-Hungary, and
Germany had more emigrants. In the 1980s, as the Spanish
economy improved, there was very little permanent emigration
from Spain. This tide turned again in the early 21st century
as Spain's economy soured, and by 2012 the unemployment rate
had topped 25 percent. More than half of Spaniards under age
25 were unable to find work, and recent university graduates
increasingly looked abroad for opportunities.
The number of emigrants has been dwarfed by the number of
people moving within Spain itself. Until the mid-1970s, most
internal migrants left rural areas seeking industrial jobs in
the larger cities, especially Madrid and Barcelona. During the
1990s the decline of Spain's traditional industries prompted a
return migration to the less-industrialized provinces.
 Most Spaniards resided in villages or towns with
populations of less than 10,000 people throughout the first
half of the twentieth century. More than three-quarters of the
population resided in cities by the early twenty-first
century. Madrid, Barcelona, Valencia, Sevilla, Zaragoza,
Málaga, and Murcia were among the cities that had the most
rapid expansion.
C. Economic Statistics and Activity
GDP in Spain measures the monetary value of production of
final goods and services in Spain over a given period
(quarterly and annual). Spain GDP per capita (GDP per citizen)
is considered an indicator of a country's (Spain) standard of
living. It is also the set of all final goods and services
produced in Spain for a year.
Gross Product of Spain fell 0.5 in the first quarter of
2021 compared to the previous quarter. Spain has a quarterly
GDP per capita, of $6,072, less than the same period last
year, when it was $6,072. Spain is number 13 in the world on
the list of countries with the lowest GDP per person.
Spain Gross Savings Rate measured at 22.5% in Dec 2020,
compared with 21.1% in the previous quarter. Spain Nominal GDP
reached 345.7 USD bn in December 2020. Spain GDP Per Capita
reached 29,583.2 USD in Dec 2019. In the latest reports, Spain
GDP contracted 9.1%, with a GDP deflator (implicit price
deflator) increased 1.0%.
D. Primary Indigenous Natural Resources

Lead, uranium, tungsten, mercury, magnesite, fluorspar,

gypsum, sepiolite, iron, nickel, crude oil, and natural gas
are all rich in Spain. Copper, zinc, gold, steel, coal,
cement, and alumina are all important mineral products in
the country. Spain is the world's fifth-largest gypsum
producer.

In the 1930s, the country was severely harmed by a civil

war, which hampered economic growth. During the 1980s,
however, the country underwent a democratic transition and
experienced tremendous economic development, making it one
of the world's most powerful economies.

Globally, Spain is:

  The fifth-largest producer of gypsum
 The fifth-largest producer of fluorite

In 2018, the total export value of Spain amounted to $345.2

billion, whereas its total import value amounted to $388
billion, which is comparable to its 2009 values of $326.7
billion and $360.3 billion respectively.

In 2018, the majority of Spain’s exports included vehicles;

making up approximately 17.1% of its total exports that
year. Other significant exports included mineral fuels,
including oil, machinery (such as computers and other
technology), plastic materials, pharmaceuticals, fruits,
nuts, clothing, iron, and steel. These primary exports
accounted for almost 56% of Spain’s total global shipments
in 2018.

E. Surface Transportation
Spain has a widespread transportation network that covers the
entire country. With such an excellent transportation network,
Spain has become a great place for tourists visiting Europe.
People want to be comfortable when they travel and they get
that comfort and convenience in Spain.
Spain is one of the most developed and culturally rich
countries in the world. It offers several different types of
transportation to its citizens and visitors. Speed rails and
modern metro systems make Spain’s transportation system one of
the best in Europe. Spain’s transit and transportation system
is convenient, comfortable and cost-effective. It will cost
you less than driving a personal vehicle to work.
1. Train
Train travel is a popular way to get around. It is really
convenient, though service is very limited on the main line,
the Spanish Speed Train (AVE), running only from Catalonia
to Andalusia and crossing over Madrid. Trains are quite
honestly the best way to travel around Spain. There are
different train services in the country that offer unique
and competitive services. Renfe, ‘The Spanish National
Highway Company’ provides the service of high-speed rails
all over Spain. This service is known as Alta Velocidad
Espanola (AVE). The train moves at a speed of about 310
Kilometers/hour. AVE offers luxurious services at a
relatively reasonable price.
Renfe is Spain’s national rail company, carrying over 510
million passengers annually. In fact, Spain is home to one
of the world’s largest high-speed rail networks, second only
to China. Trains on the high-speed rail network travel at
speeds up to 310km/h; only Spain’s northernmost autonomous
communities (such as Cantabria and the Basque Country) as
well as Extremadura and Murcia lack high-speed connections.
One can purchase tickets online, at a RENFE ticket office or
from a station agent. Local train tickets also can be bought
from ticket machines, when available. Renfe usually opens
ticket reservations either 90 days (for AVE trains) or 60
days (for all others) before departure. This isn’t always
the case, however; some trains are only available with as
little as a month to spare.
Distinguishing between the different trains in Spain is
confusing for newcomers, as Renfe often brands regional
networks and individual routes. In general, there are three
types of train services in Spain:
• Larga Distancia (long-distance): These services
include high-speed services like AVE or intercity
services that partially use high-speed routes (e.g.,
Alvia, Altaria, and Intercity).
• Media Distancia (medium-distance): Services at
this level travel between urban areas but are the
second-fastest option.
• Local services: These services include Regional
Express trains. Local services often stop at every
station.
Spanish trains usually have two classes: Turista (second-
class) and Preferente (first-class). On high-speed lines,
Preferente passengers receive a hot meal and access to Sala
Club lounges at the departure station. Some high-speed
trains also have Turista Plus seats, which essentially
 amounts to a premium second-class seat that is more
comfortable but without a complimentary meal.
Additionally the trains are quite, clean and comfortable so
you can ride them with ease. Fares in Spain are among the
lowest in Europe.
2. Bus transportation
The buses are almost always on time. There are many
different. Business companies in Spain. Some of the major
players in the market are Avanza, Alsa, Eurolines, Flixbus
and Monbus. All these are high quality and cost-effective
bus services. In addition to these amazing bus services, you
can also find FlixBus for international travel to other
countries in Europe. The fares are ridiculously reasonable
for the services they offer. Almost all buses in Spain are
equipped with state of the art equipment which ensures that
the passengers enjoy a convenient and reliable travelling
experience. The bus is the cheapest and the most common mode
of transportation in Spain.

3. Taxi Cab
In addition to government-owned taxis, you can also find
driving services like Uber in Spain. For shorter distances,
people tend to prefer travelling through taxis. taxi cab
rental is available in most Spain cities. Taxi cabs are
convenient and can take you anywhere that you need to go.
Taxi cabs operate 24 hours per day, 7 days per week. The
rates for a taxi can be expensive with taxi cab companies
charging a per meter rate for each destination. Flat rates
to/from the airport may be available.
4. Renting a Car
International car rental agencies are widely available in
Spain; they include Budget, Hertz, Avis and Thrifty.
European agencies, such as Europcar, and Spanish companies,
including Pepecar, are also available. Advance reservations
online nearly always get you the best rate. Most pick-up and
drop-off locations are at airports, with some at train
stations or city offices.
5. Spain Water Taxis
 Vacationers from the UK can arrive in Spain at Santander via
ferry from Plymouth or Bilbao from Portsmouth. The port at
Valencia offers boats from the mainland to Spain’s Balearic
Islands, while travelers to the Canary Islands can take a
ferry from Cadiz. Once on the islands, inter-island ferries
are the best way to get around.

F. Ports

With nearly 5,000km of coastline and a strategic location

where the Mediterranean meets the Atlantic, Spain has been a
center for maritime trade since the time of the Phoenicians.
The Kingdom of Spain is a European country located on the
Iberian Peninsula. To the South West of mainland Europe, it
is famed for tourism, fishing, sports, and several other
industries.

Spain is covered by water on 3 sides, making it ideal for

establishing ports and other shipping hubs. Well-connected
facilities are linked to several international airports of
the region.

Shipping is a vital industry in Spain. However, fishing is

prominent along with most coastal villages and cities. In
fact, Pescanova, which is one of the largest fish exporters
in the world, is based out of Spain. The main exports from
the country include foodstuff, fish, minerals, minor oil
produce, chemicals etc.

These ports and shipyards are considered to be facilities of

national interest. They are independently operated under
different port authorities but are centrally managed by the
Ports of the State, which is a government-owned company
responsible for the execution of policies. It is known
regionally as Puertos del Estado.

From the past several centuries, Spain’s maritime history

has included commercial trading, naval inquisitions to
distant lands, and coastal ferries.
Spain has long been synonymous with efficient and expansive
sea trade, an association which has historically brought
prosperity to the European nation. With well-maintained
ports and consistent growth in technology, equipment and
expertise the ports of Spain will continue to hold the key
to trade, partnership and economic growth across the region.

Spain's naval power helped create the first global empire

through the conquest of territory in North and South
America, and later Asia, dramatically altering the landscape
of global trade.
Today, shipping, fishing and sea bound tourism remain vital
contributors to national GDP, and, as a result, Spain boasts
some of the largest ports in the Mediterranean. Spain has
the fourth-largest economy in the Eurozone, and the country
is the second-most popular tourist destination in the world.
While the 2008-2013 financial crisis hit Spain particularly
hard, the country is well on its way to recovery, with 2.8%
growth in 2018 exceeding the Eurozone average. Spain
receives 80% of its imports and sends out over 50% of its
exports through seaports, and has the third-largest fishing
fleet in the world, meaning that ports play an enormously
important role in national prosperity.
While each port is run by a different port authority, these
entities are overseen by the state-owned Puertos del Estado.
The following is a brief overview of the three largest ports
in Spain as of February 2021:

1. Port of Algeciras
Algeciras is one of the largest ports in Spain. The
port sits along the 5,000km of coastline that is the
country of Spain just like her sister ports. Even
though this is the largest port in Spain, it’s the
third largest on the Mediterranean. Worldwide, it’s the
ninth largest. The port is located in Andalucia, in the
province of Cadiz, and is the epicenter for trade for
tobacco, fishing, agriculture and oil.
2. Port of Valencia
The Port of Valencia is Spain's second-busiest port, at
Ttimes overtaking the Port of Algeciras in certain
respects. This port is impressive in size with an
annual traffic of 57 million tones in cargo capacity.
 3. Port of Barcelona
Barcelona is situated on the Northeastern coast of
Spain and is located in the Catalan Province of the
country. It is the Spain’s third-largest port, that has
been in existence for over 2000 years and it’s still
going strong in terms of trade and port services. The
port is an excellent partner for major European ports
along the Mediterranean coast.
4. Port of Bilbao
Located in the Bilbao Abra Bay in Basque country this
port is also called the exterior port. This port has
been popular since the medieval times and is associated
with the steel and iron trade of the time.
Bilbao evolved to become the gateway to the European
Atlantic Ocean trade routes. It has become the premier
port in terms of trade with the United Kingdom. As a
big logistic player in the trade along the Atlantic
corridor, the port has built its infrastructure in dry
ports and other logistic zones.
5. Port of Castellon
Found in the city of Castellon de la Plana, this port
is the youngest compared to the other major ports in
Spain yet has registered impressive numbers. This is a
logistical port which is growing at five times the
average rate of other similar sized ports in Spain.
It’s the leading provider of logistic services for the
local economy of Castellon, with a throughput of more
than 20 million tones in cargo capacity in 2018.

G. Communication Systems

Generally adequate facilities. Telephone system

operated by Government Company that was in process of
modernizing the network. Countrywide radio and television
reception. International communication provided by numerous
coaxial submarine cables and two satellite ground stations.

The National Telephone Company of Spain (Compania

Telefonica Nacional de Espana--CTNE), popularly known as La
Telefonica, was established in 1924 as a subsidiary of the
 American-owned International Telephone and Telegraph Company
(ITT). The company was granted exclusive monopoly rights for
the installation of telephone service in 1945, when it was
nationalized. CTNE's operations were supervised by DGPE, and
as of 1984 the government had a 31.5 percent interest in the
company. In an effort to modernize its telecommunications
network, CTNE entered into technology agreements with a
number of West European, Japanese, and United States
companies, and it also obtained stock market listings in
Frankfurt, London, Paris, Tokyo, and New York. In addition,
CTNE planned to invest 260 billion pesetas--a tremendous
increase over earlier years--with the aim of becoming a
guiding force in Spanish high technology. An indication that
there was room for the company to grow was that Spain had a
mere 369 telephones per 1,000 inhabitants in 1985, a figure
that lagged well behind most other EC countries.

he Postal Service, which included the national

telegraph system, was operated by the Ministry of
Transportation, Tourism, and Communications. Its
headquarters was in the Palace of Communications in Madrid.
One of the services offered by the Postal Service was a
network of postal savings banks, which had been established
in 1916.

H. Working Conditions
In Spain, the standard work week is 40 hours, however
this varies by occupation. The legislation also mandates a
minimum of twelve hours of rest between working days and
prohibits employees from working more than eighty hours of
overtime in a single year unless they are covered by a
collective bargaining agreement.
An employee’s salary includes all amounts received by an
employee in compensation for services rendered. Salary can be
monetary or in kind, but the latter cannot be higher than 30%
of the total amount received by the employee. Full time
employees in Spain are entitled to a minimum of 22 days of
paid holiday. Spain also has 14 holidays, both national and
local, that are not included in paid holidays. Extra days can
be taken as holiday in the event of extraordinary situations.
I. Labor Force
 According to Trading Economics global macro models and
experts, Spain's labor force participation rate is predicted
to reach 57.20 percent at the end of this quarter. In a year's
time, it expects that the Labor Force Participation Rate in
Spain will be 57.90 percent.
J. Principal Industries

The main industries of Spain are the machine tools,

pharmaceuticals, metals and metal manufactures, chemicals,
shipbuilding, automobiles, medical equipment, textiles and
apparel (including footwear), food and beverages, clay and
refractory products, footwear, tourism.
K. Inward Foreign Direct Investment

Foreign direct investment (FDI) inward stock in Spain 2013-

2019. The inward stock of foreign direct investment (FDI) in
Spain reached in 2019 its highest value within the concerned
period, nearly 723.8 billion USD dollars.