Export Markets Spain's Industry Makes a Comeback: Economy Back on Track?

Author Stéphane Itasse

After the Euro crisis had ensured significant economic collapse in Spain, the economy improved again. Even the machine-building can profit by increasing investments of its customer industries.

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Spain’s Minister for Industry, Energy and Tourism, José Manuel Soria has launched a new programme for promotion of investments.
Spain’s Minister for Industry, Energy and Tourism, José Manuel Soria has launched a new programme for promotion of investments.
(Bild: Department for Industry, Energy and Tourism)

According to the statistical office INE, in 2015, the Spanish gross domestic product actually grew about 3.2 %; in the previous year it had still been 1.4 %. Both the rates are clearly above the growth of EU or the Eurozone. Thereby, according to the statistical office, the Spanish domestic demand in particular has revived the economy. Hence, the country has moved on from the six recession years from 2008 to 2013. The EU-commission expects a profit of 2.7 % for the current year.

Although signs of a breather can be found in the quarterly comparison in case of the industry-indicators, the growth rates are still high. In this way, the gross capital investments in the fourth quarter add around 6.4 % to the previous year, in the third quarter it had still been 6.7 %. The equipment investments grew around 10.9 % in the three months towards the end of 2015 after 11.2 % in the previous quarter. The growth of the manufacturing industry slowed down in the fourth quarter of the previous year to 4.1 % after 4.3 % in the months from July to September.

Industrial enterprises become more confident again

Positive figures are also appearing gradually in case of the industrial enterprises. According to the recent survey for industrial economic activity of the Department of Industry, Energy and Tourism, in March 2016 in case of–1.9 points, 0.4 points were more than in the previous month. However, 0.9 less than in March 2015. In 2011 and 2012, this index collapsed temporarily to–20 points. Therewith, this sentiment index follows the index of the industry production, which is again growing since the fourth quarter of 2013.The department views the order backlogs dropped by 6.5% in the first three months of 2016 as well as the stocks of finished goods increased by 8 % as the cause for the present slight drop in the sentiment

Detailed figures for even the machine-building are not available as yet. INE reports of sales growth of 8.7 % in 2015. It is reflected in the import of machinery and equipment, which maintained its two-digit growth rates from the year 2014 even in the first nine months of 2015 with a profit of 18.9 %. The imports from Germany are gaining even more strongly with an increase by 28.6 %, the most important country in supplying machines. According to the foreign trade promotion of Germany Trade and Invest (GTAI), the positive trend supports the state industrialisation policy, which facilitates investments in modern and more efficient technology together with recent EU-subsidies.

The government launches subsidy programme for industrial investments

Over the next few years, the signs for further growth in machine-building are good. In order to promote reindustrialisation and to improve competitiveness of the industry, the Spanish government of 2016 shall grant soft loans to the industry in the amount of total 757.5 million Euros. The duration amounts to up to ten years, the interest lies between 1.7 and 4 %. Thereby, Madrid supports the new construction of industrial plants, their shifting within the country and increase in production capacity or modernisation. Overall, almost 10,000 new workplaces should emerge directly and indirectly. Additionally, this support should contribute to the increase in industry exports, especially of products with a high technical standard.

Furthermore, not just the construction industry alone shall gain ground again after just seven years. Particularly all the automobile manufacturers with production sites in Spain are planning investments in millions, like the German-Spanish Chamber of Commerce (AHK Spain) reports. The labour market reforms, which have led to more flexibility and power to compete are essential.