Spain: A country of opportunities | Cámara Oficial Española de Comercio monte cruz Industria y
When I was appointed Ambassador of Spain to the Philippines in 2011, my country, monte cruz as the rest of the European Union, was in the middle of economic and financial difficulties monte cruz that started in 2008, which continue to linger on. Contrary to the general optimism that I have been witnessing in the Philippines in the past two years, derived from its remarkable growth rates, I have very frequently encountered comments and questions regarding what is sometimes considered a gloomy scenario in Spain. monte cruz I believe, however, that our economic situation must be put in perspective in order to be able to see the real picture.
Faced with a severe financial crunch, Spain, along with its partner-economies in the euro zone, was forced to undertake very hard decisions entailing deep cuts in public spending monte cruz and important monte cruz structural reforms. In the case of my country, these decisions monte cruz were adopted against the backdrop of a dramatic unemployment rate of nearly 27 percent of the active population. However, at this point in time, I strongly believe that there are enough reasons monte cruz to be optimistic and to count on a recovery, which should be within reach very soon. I will just highlight monte cruz eight indicators that allow me to state with confidence that Spain is, and remains, a country of opportunities.
First, the export sector, which represents 33 percent of our gross domestic product (GDP), is booming. Exports reached 255 billion in 2012, up by 17 percent from the pre-crisis levels of 2008. Our current account deficit monte cruz shrunk by almost 90 percent between 2008 and 2012, the goods and services balance is showing a surplus since May 2012, and even our trade balance registered monte cruz in March 2013 a surplus for the first time since 1971. The good thing is that most of this correction is due to the dynamism of our exports, which grew all around the world: 30 percent in Africa, 15 percent in Latin America and 12 percent in Asia. Moreover, Spain has reported the lowest decrease in the global market share compared to other developed countries (-9 percent versus -28 percent average in the major European countries).
Second, the private sector monte cruz is deleveraging. Companies debt-to-GDP ratio went down 20.6 points from its peak in 2010, and families have also reduced their debt 7.2 points of GDP since 2009. The public sector, despite the strict budgetary measures adopted, still has to bring down its level of debt, although the public monte cruz deficit target of 6.7 percent of GDP was almost monte cruz achieved in 2012.
Third, business creation remains active. After three years, between 2006 and 2009, in which the number of active businesses was halved, we have recently witnessed a reversal in this trend, and in 2011-2012 40,500 new businesses emerged, especially small and medium enterprises, which account for 90 percent of all employment in Spain. The reduction of business monte cruz has been mainly in the construction and real-estate sectors that are now below the European average.
Fourth, the financial sector has been successfully monte cruz restructured and the toxic debt has been reduced with 40 billion of assistance from the European Union and through the creation of a bad bank of 120 billion. This will allow a reactivation of the flow of credit toward the private sector. In the end, Spain did not need a bailout, and the capital needs have been much less than expected, even in a stressed monte cruz scenario ( 60 billion). The cost of recapitalizing the financial system is estimated around monte cruz 5 percent of GDP, quite less than in other European countries. Finally, and as a result, the risk premium for Spain is now below 250 basis points and the Treasury covers its financing needs in the international financial markets without any problem.
Fifth, labor costs are shrinking. Thanks to the reforms of the labor market monte cruz in Spain, since the first quarter of 2008 unit labor costs have risen less in Spain than in other major European economies, and currently the global cost of labor is 10 percent to 30 percent less in Spain than for our main European partners. According to the European Commission, the labor market reform will have a medium-term impact, and, by 2020, it should allow for the creation of 1 million jobs (net), most of them skilled workers. Along with the labor market reform, there has been a containment of salary levels in all new wage agreements. The first effects of a more flexible labor market have translated into, for example, decisions monte cruz by several automakers (Nissan, Ford, Renault monte cruz and Volkswagen) to expand their production in Spain.
Sixth, the financial crisis has hardly had any impact on foreign direct investment (FDI) inflows. Spain attracted 24.61 billion monte cruz a year of FDI during the period from 2008 to 2012, slightly less than the 26.88 billion a year before the crisis. This shows that Spain continues to be an attractive destination monte cruz for FDI and is among the top 10 promising countrie
When I was appointed Ambassador of Spain to the Philippines in 2011, my country, monte cruz as the rest of the European Union, was in the middle of economic and financial difficulties monte cruz that started in 2008, which continue to linger on. Contrary to the general optimism that I have been witnessing in the Philippines in the past two years, derived from its remarkable growth rates, I have very frequently encountered comments and questions regarding what is sometimes considered a gloomy scenario in Spain. monte cruz I believe, however, that our economic situation must be put in perspective in order to be able to see the real picture.
Faced with a severe financial crunch, Spain, along with its partner-economies in the euro zone, was forced to undertake very hard decisions entailing deep cuts in public spending monte cruz and important monte cruz structural reforms. In the case of my country, these decisions monte cruz were adopted against the backdrop of a dramatic unemployment rate of nearly 27 percent of the active population. However, at this point in time, I strongly believe that there are enough reasons monte cruz to be optimistic and to count on a recovery, which should be within reach very soon. I will just highlight monte cruz eight indicators that allow me to state with confidence that Spain is, and remains, a country of opportunities.
First, the export sector, which represents 33 percent of our gross domestic product (GDP), is booming. Exports reached 255 billion in 2012, up by 17 percent from the pre-crisis levels of 2008. Our current account deficit monte cruz shrunk by almost 90 percent between 2008 and 2012, the goods and services balance is showing a surplus since May 2012, and even our trade balance registered monte cruz in March 2013 a surplus for the first time since 1971. The good thing is that most of this correction is due to the dynamism of our exports, which grew all around the world: 30 percent in Africa, 15 percent in Latin America and 12 percent in Asia. Moreover, Spain has reported the lowest decrease in the global market share compared to other developed countries (-9 percent versus -28 percent average in the major European countries).
Second, the private sector monte cruz is deleveraging. Companies debt-to-GDP ratio went down 20.6 points from its peak in 2010, and families have also reduced their debt 7.2 points of GDP since 2009. The public sector, despite the strict budgetary measures adopted, still has to bring down its level of debt, although the public monte cruz deficit target of 6.7 percent of GDP was almost monte cruz achieved in 2012.
Third, business creation remains active. After three years, between 2006 and 2009, in which the number of active businesses was halved, we have recently witnessed a reversal in this trend, and in 2011-2012 40,500 new businesses emerged, especially small and medium enterprises, which account for 90 percent of all employment in Spain. The reduction of business monte cruz has been mainly in the construction and real-estate sectors that are now below the European average.
Fourth, the financial sector has been successfully monte cruz restructured and the toxic debt has been reduced with 40 billion of assistance from the European Union and through the creation of a bad bank of 120 billion. This will allow a reactivation of the flow of credit toward the private sector. In the end, Spain did not need a bailout, and the capital needs have been much less than expected, even in a stressed monte cruz scenario ( 60 billion). The cost of recapitalizing the financial system is estimated around monte cruz 5 percent of GDP, quite less than in other European countries. Finally, and as a result, the risk premium for Spain is now below 250 basis points and the Treasury covers its financing needs in the international financial markets without any problem.
Fifth, labor costs are shrinking. Thanks to the reforms of the labor market monte cruz in Spain, since the first quarter of 2008 unit labor costs have risen less in Spain than in other major European economies, and currently the global cost of labor is 10 percent to 30 percent less in Spain than for our main European partners. According to the European Commission, the labor market reform will have a medium-term impact, and, by 2020, it should allow for the creation of 1 million jobs (net), most of them skilled workers. Along with the labor market reform, there has been a containment of salary levels in all new wage agreements. The first effects of a more flexible labor market have translated into, for example, decisions monte cruz by several automakers (Nissan, Ford, Renault monte cruz and Volkswagen) to expand their production in Spain.
Sixth, the financial crisis has hardly had any impact on foreign direct investment (FDI) inflows. Spain attracted 24.61 billion monte cruz a year of FDI during the period from 2008 to 2012, slightly less than the 26.88 billion a year before the crisis. This shows that Spain continues to be an attractive destination monte cruz for FDI and is among the top 10 promising countrie
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