Degree in Business Administration 2023-24

Spanish Economy
Exercises: Set # 2

1. Using the following information, answer the questions

Net
€, billions 2019 2022
Trade on goods -26.62 -58.34
Trade on services 63.24 77.04
Primary rents 2.20 3.66
Secondary rents -12.58 -14.59
Capital account 4.22 11.98
GDP 1,245.51 1,327.11
Source: Bank of Spain & INE

a) How much is the borrowing need / lending capacity for Spain in both years? (in euros as well
as in % of GDP)

b) Compute the compensating capacity of the service trade balance for the goods trade deficit
in both years.

c) Given that the energy goods balance had a deficit of 23.453 billion € in 2019 and 52.617 billion
€ in 2022, what part of the goods trade deficit can be explained by energy goods?

2.‐ Using the statistical data provided in the website of the Bank of Spain, analyse the balancing
power of Tourism for the trade in goods.

3.‐ Using the information on the Spanish Balance of Payments

€ billions 2014 2018

Financial account (net) 21.106 31.285
Except Bank of Spain -5.557 45.535
Direct investments 9.356 -15.188
Portfolio investments -6.101 12.992
Other investments -9.921 46.148
Financial derivatives. 1.109 1.583
Bank of Spain 26.663 -14.250
Reserves 3890 2.182
Financial assets vs Euro system 46.973 -9.487
Other net assets -24.200 -6.945
Errors & Omissions 6.420 2.232
GDP 1,037.820 1,202.193
Source: Bank of Spain, Balance of Payments
a) How much is the lending capacity / borrowing needs in both years (in € billions as well
as % of GDP)?
b) Discuss which sources / means were used for that lending capacity / borrowing needs

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Degree in Business Administration 2023-24
Spanish Economy
Exercises: Set # 2

4.‐ Using the information on the Current Account & Capital Account balances presented in the
figure, discuss the main features in the 2007‐2013 crisis and compare them with the traditional
characteristics of the Spanish Balance of Payments.

Current account & Capital account balances (1995-2014) (% of GDP)

6

-2

-4

-6

-8

-10

-12

-14
1985

1990

1995

2000

2005

2010

2014
Capital Secondary rents
Primary rents Services
Goods Fin. Capacity (+) / Req (-)

5. Using the information of the next figure, discuss the main characteristics of the Spanish
Balance of Payments, identifying common elements in expansive and recessive periods (if any).

6,00
4,00
2,00
,00
-2,00
-4,00
-6,00
-8,00
-10,00
-12,00
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

Lending capacity (+) / Borrowing needs (-)

Current account
Capital account

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Degree in Business Administration 2023-24
Spanish Economy
Exercises: Set # 2

6. Using the following information, answer the questions

Spanish NeeR and RPI vs Developed countries (Base 1999)

RPI
Year NeeR Consumption Manufacturing
prices costs
2015 98.7 109.2 108.9
2019 101.1 107.9 109.8
2021 100.7 109.1 111.6
Source: Bank of Spain

a) How much is the ReeR in each year. Does the Spanish economy gain or lose competitiveness
vs developed countries in the crisis and the expansive period?

b) Calculate how much NeeR and RPI changed between 2019 and 2021. With these values obtain
the change in ReeR. Discuss your results and suggest the policies that can be implemented in
order to solve the problems revealed by those indicators.

7. Along the last year (July 2021 to July 2022) the Relative Price Index of Spain vs. Euro Area
increased 1.79% and versus EU‐27 1.17%. Additionally, the exchange rate of euro vs the
currencies of EU‐27 increased 0.30%

What has happened with the Spanish external competitiveness vs. these two areas?

Current forecasts point that Spanish inflation is going to be larger than both in Euro Area as in
EU‐27. What will it happen with Spanish competitiveness? Justify your answers

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