As the fourth largest eurozone economy, Spain offers a wealth of opportunity for investors and is an important market for many of our clients. The past three decades have seen a significant transformation in the country, with a move from dictatorship into democracy, the embracing of the EU, and the adoption of the euro. Spain emerged from deep recession after the eurozone financial crisis, to be one of the eurozone's fastest growing economies in 2014 and 2015, but key risks continue to cloud Spain’s longer term outlook.

We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. They also benefit from in-depth analysis on 18 of Spain’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our results-proven research teams. We aim to keep you ahead of the curve so you can operate with confidence in Spain.

Country Risk

Spain Country Risk

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Core Views

  • Spain's economy will remain among the fastest growing in the eurozone in 2016, in spite of the country's ongoing political impasse.

  • Tailwinds from cheap oil and ECB asset purchases (QE) will support short-term growth, but will act as a disincentive for politicians to implement the structural reforms needed to boost long-term growth.

  • Spain's current account surplus has peaked and will shrink over the coming years, returning to deficit in around 2020.

  • Already unrealistic budget deficit targets will move further out of reach once a new government is (eventually) formed in Spain.

  • Spain is set for a period of high political instability, as the December 20 election produced no clear winner and left Spain with an extremely divided political...

Spain Industry Coverage (27)

Agribusiness

Spain Agribusiness

BMI View:

BMI View: Livestock prices have held up relatively well in the EU despite the impact of Russia's embargo. We therefore expect to see continued growth for pork, Spain's most important livestock commodity. Meanwhile, we expect a lower wheat harvest, as droughts will offset good plantings. The dairy sub-sector is adapting to the end of the EU production quota, which will increase competitive pressure on Spanish producers and lead to a subdued outlook for the sector's growth.

Agribusiness Market Value
BMI Market Value By Commodity (2011-2019)
...

Autos

Spain Autos

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BMI View: The extension of purchasing subsidies for passenger cars will provide only marginal support to sales in H116, but not to the same extent as previous years as less consumers are willing and able to meet the scrappage requirements.

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Passenger Car and Light Commercial Vehicle Sales
(2014-2020)
f = BMI forecast. Source: National Sources, BMI

Commercial Banking

Spain Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Defence & Security

Spain Defence & Security

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BMI View: We expect the Spanish defence budget to grow in line with gradually improving economic conditions in coming years. However, we note that funding available for new procurement remains restricted, as the defence ministry's debt on existing military programmes is substantial. This will also limit state investment into sector R&D - a challenge for Spanish defence manufacturers, as they face stiff competition from world-class Western European suppliers. That said, Spain's defence industry ...

Food & Drink

Spain Food & Drink

BMI View:

BMI View: After a strong recovery year in 2015, the Spanish food and drink sector is expected to see momentum stabilise in 2016. A consumer spending recovery is underway in the broader Spanish economy due to improving confidence, low inflation and falling unemployment; however, expectations are tempered by caution over the longer term. Youth unemployment is forecast to remain exceptionally high by global standards over the next five years, and this curbs the outlook for some of the major health-conscious and innovative trends noticeable in other developed markets.

Food & Drink Spending
(2013-2020)
...

Freight Transport

Spain Freight Transport

BMI View:

BMI View: The worst is over for the Spanish economy, and consequently its freight sector. Following years of contraction across freight modes, there were signs of recovery in 2014, and we expect volumes to continue on this upward trend in 2015. We caution however that the freight sector remains overly reliant on export demand, particularly from Spain's main eurozone partners, many of which are not in rude health themselves.

Headline Industry Data

  • Air freight volume is set to grow by 1.6% to reach 597,800 tonnes in 2015. Medium-term growth (to 2019) will average 2.1% per annum.

  • Tonnage handled at the port of Algeciras will grow by 6.60% to reach 103.17mn tonnes, with medium-term growth averaging 5.8% per annum.

  • Boxes handled at the port of Valencia...

Infrastructure

Spain Infrastructure

BMI View:

BMI View : We maintain our positive construction industry growth forecast for Spain in 2016 on the back of investment in transport infrastructure, particularly in the railway segment. Political uncertainty following the general election in December 2015 poses the main downside risk to our forecasts as it will deter much needed private investment into the sector, in addition to delaying policy making and the approval of infrastructure projects.

Latest Updates And Structural Trends

  • Growth in the Spanish construction sector will be driven largely by EU-backed developments in the rail sector, as well as economic recovery and investment-friendly regulatory changes in the renewable energy sector. However, the pace of growth will be moderate, particularly in residential building and public works, with economic growth and...

Insurance

Spain Insurance

BMI View:

BMI View: Spain has a large and well-developed insurance market, though penetration and density rates could be improved further to catch up with leading regional markets such as France and the UK. Growth in the insurance sector has been held back in recent years by a weak domestic economy, but with Spain's recovery now gaining traction, we hold a more positive outlook for both the life and non-life sectors. As unemployment rates improve, and household incomes receive a further boost from falling oil prices, we expect to see higher rates of private financial consumption and in turn more demand for various insurable products. Meanwhile, an ageing population means demand is also rising for life products, including...

Medical Devices

Spain Medical Devices

BMI View:

BMI View: We forecast low market growth over the 2014-2019 period, as pre-crisis import growth levels are unlikely to return. Due to its large size, the market will remain attractive to multinational and national companies. Exports will counterbalance contained internal sales and still sizeable SNS debts. Most of the market will remain accountable to the public sector, affected by cost-containment measures implemented by the...

Metals

Spain Metals

BMI View:

BMI View: Tin prices will be capped by US dollar strength in 2016, leading us to trim our price forecast to USD14,500/tonne. Beyond 2016, prices will recover gradually as the global tin market posts sustained market deficits and inventories dwindle.

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Global - Tin Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Spain Metals

BMI View:

BMI view: We will maintain our aluminium price forecast for 2016 at USD1,575/tonne. Although prices will bottom in H116, production will outstrip consumption until 2018 and anchor prices. In particular, cheap Chinese exports will keep the market well supplied.

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Global - Aluminium Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Spain Metals

BMI View:

BMI View: Globally, iron ore prices will remain subdued due to weak demand growth in China and expanding output by major miners in Australia and Brazil. China will see output slow as the country's iron ore miners operate on the higher end of the global iron ore cost curve.

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Global Iron Ore Forecast
2014 2015e 2016f 2017f 2018f

Spain Metals

BMI View:

BMI View: Nickel prices will bottom in 2016 as weak production drags the global market into deficit. For instance, we expect Chinese imports of nickel to grow over the coming quarters. Prices will begin 2016 weaker than we had previously expected and we have thus revised down our 2016 average price forecast to USD9,000/tonne from USD10,500/tonne.

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Global Nickel Forecasts
2013 2014 2015e

Spain Metals

BMI View:

BMI View: We have revised down our average copper price forecast for 2016 to USD4,900/tonne. We expect prices to find a floor over the first half of 2016, and begin to stabilise thereafter, supported by production cuts and modest consumption growth.

Global - Copper Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f ...

Spain Metals

BMI View:

BMI View: Gold prices will prove resilient in 2016 due to a dovish shift in global monetary policy and elevated systemic financial sector risks. However, we do not foresee a sustained multi-year recovery and the mining sector will thus remain under significant stress. We forecast slowing mine production growth and increasing consolidation.

BMI Gold Forecasts
2014 2015 2016f 2017f ...

Spain Metals

BMI View:

BMI View: Global steel prices will remain subdued due to a persistent steel oversupply over the coming quarters. From 2017 onwards, steel prices will gradually edge higher as the global steel surplus will narrow due to Chinese supply moderation.

Steel Price Forecast
2014 2015 2016f 2017f 2018f 2019f...

Spain Metals

BMI View:

BMI View: We maintain our average zinc price forecast for 2016 of USD1,750/tonne. We expect zinc prices to reach a floor over the first half of 2016, and begin to stabilise thereafter, as production cuts shift the market to a deficit.

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Global - Zinc Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f

Spain Metals

BMI View:

BMI View: Lead prices will gradually edge higher as the global lead market will shift into deficit by 2017 as production growth will slow over the coming years.

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BMI Lead Price Forecast
Current* 2016f 2017f 2018f 2019f 2020f

Oil & Gas

Spain Oil & Gas

BMI View:

BMI View : Though we witnessed an uptick in upstream investment into conventional resources within Spain over the past several years, we expect domestic production of oil and gas will remain negligible. We expect imports will meet approximately 99% of demand for the foreseeable future. Moreover, we believe prospects for onshore unconventionals will remain limited as significant technical, economic, environmental and political obstacles preclude us from including further upstream development of shale gas resources...

Petrochemicals

Spain Petrochemicals

BMI View:

BMI View: Downsizing of capacity did not dent Spain's continuing robust recovery in petrochemicals in 2015. In the first nine months of 2015, the Spanish petrochemicals industry saw respectable growth with chemicals output up 3.7% y-o-y and rubber and plastics rising 5.7%. While there are risks going forward and external vulnerabilities, the industry is set for another year of growth in 2016.

The country's domestic markets are seeing uneven growth with construction falling behind the automotive industry. The former represents the large bulk of PVC and polypropylene (PP) pipe consumption while the latter requires a diverse range of products including PP, polyurethanes (PUs) and synthetic rubbers. With construction stagnating, it will be the solid growth in the automotive industry that stimulates petrochemicals demand with a resultant pull on certain market...

Pharmaceuticals & Healthcare

Spain Pharmaceuticals & Healthcare

BMI View:

BMI View: The Spanish pharmaceutical market has struggled in the face of the economic crisis, but is now expected to return to pre-crisis levels in the coming years. Despite being an economic outperformer in Western Europe, market growth will remain slow but steady through the forecasted period, sustained by an aging population. However, we believe the government will continue with cost-efficient policies aimed at the pharmaceutical sector in order to control rising healthcare bills.

Headline Expenditure Projections

  • Pharmaceuticals: EUR25.15bn (USD27.70bn) in 2015 to EUR25.61bn (USD27.40bn) in 2016; +1.7% in local currency terms and -1.1% in US dollar terms. ...

Power

Spain Power

BMI View:

BMI View : Spain's power sector will be marked by a focus on renewable and gas-fired generation. Renewable capacity will be hampered by lack of subsidies and uncertain policy environment (as Spain is yet to form a workable governing coalition) while gas-fired power will come from mothballed capacity brought online to compensate for reduced hydropower output.

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Headline Power Forecasts (Spain 2015-2021)
2015e 2016f

Renewables

Spain Renewables

BMI View:

BMI View: We maintain our muted outlook for the Spanish renewables sector this quarter, with investor confidence set to remain weak due to regulatory uncertainty from retroactive subsidy cuts and increasingly stringent sector regulation. The government attempt to unlock growth through more sustainable auctioning system will only have a limited impact, as only 700 megawatts of capacity is to be on offer in the first auction, and an auction timeframe has yet to surface. We therefore expect the country's renewables giants, such as Iberdrola and Gamesa, to look elsewhere for growth opportunities....

Retail

Spain Retail

BMI View:

BMI View: Non-essential spending will be dampened throughout 2016 as a result of a challenging labour market where high unemployment and low household income growth continue to impact on disposable income and discretionary spending. Despite this, the Spanish economy continues to recover and is maintaining positive growth of 0.8%. Underpinned by a large highly urbanised population, developed infrastructure networks and rising inflation, signifying increased consumer demand, BMI expect household spending to growth by 4.9% in 2016-03-08 retail sales to continue to recover.

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Headline Household Spending
(2014-2020)

Telecommunications

Spain Telecommunications

BMI View:

BMI View: The latest data from Spain's telecoms regulator, the CNMC, for the end of 2015 shows that fibre continues to grow as the main access technology for broadband internet services. In December 2015 the EC approved the regulator's proposal to open up Telefonica's fibre network in Spain. Although BMI welcomes this development, we maintain our view that the regulator needs to strike a balance between encouraging investment in new technologies and ensuring competitive markets as well as universal coverage.

Latest Updates & Industry Developments

  • In December 2015 the European Commission (EC) approved the Comision Nacional de los...

Tourism

Spain Tourism

BMI View:

BMI View: We expect tourist arrivals to Spain to continue increasing in 2016, reaching 69.7bn. This will be driven primarily by arrivals from the top European source markets, which economies are recovering and which citizens will continue to be seeking short breaks on Spanish beaches (such as Germans and Britons). Another key driver, in the longer term, will be the return of MICE events to Barcelona and Madrid, which will incidentally also provide new opportunities in the high-end hotel sector. Spanish economic recovery will also see more Spaniards travelling abroad, but many will continue to holiday also in their country.

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Key Forecasts (Spain 2013-2020)
2013e

Water

Spain Water

BMI View:

BMI View: This quarter we have upgraded and expanded our water forecasts for Spain to include desalination and reservoir extraction and losses . Overall, we expect that extraction and consumption levels will see an incremental decline, as more conservative usage habits in both domestic and agricultural consumers start to come into effect.

Spain's economic recovery will remain unbalanced in 2015. Real GDP growth is likely to remain overly dependent on net exports, while household spending remains tepid. This is reflected by a lack of inflationary pressures in the country, which continues to act as a deterrent for potential investors and constricts the maintenance and modernisation of the water and wastewater...

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