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 economic recovery will remain steady in 2015 and 2016, with real GDP growth set to outperform the eurozone average.

  • However, growth rates will struggle to match pre-crisis levels, due a lack of sustainable growth drivers. An overreliance on private consumption for growth is a threat given underlying labour market vulnerabilities.

  • The era of export driven growth is over in Spain, as improving domestic demand boosts imports and exports struggle amidst tepid demand from Spain's main eurozone trading partners.

  • Spain will adopt a more expansive fiscal policy in the run up to parliamentary elections in December 2015, and probably beyond.

  • Spain will struggle to pull away from deflationary territory in 2015, due to declining energy and food prices. ECB...

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Spain Industry Coverage (18)

Agribusiness

Spain Agribusiness

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BMI View: The importance of pork in local diets and still strong pork exports should continue to provide support for pork production and consumption growth. We forecast pork production to rise by 11.2% to 3.8mn tonnes over our forecasted period from 2012/13 out to 2017/2018. Meanwhile, a sharp drop in yields for wheat and barley, and a fall in corn acreage due to irrigation concerns bode poorly for grain producers going forward. The dairy sub-sector is adapting to a new legislative framework under the EU's milk package, which could lead to greater stability, although the potentially most transformative policy - collective bargaining - has...

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Autos

Spain Autos

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BMI forecasts a 20.0% increase in vehicle sales in 2014 coming from an expected 18% increase in the passenger car segment and 32.0% rise in commercial vehicle (CV) sales. We expect growth to slow steadily in 2015 to 6.3% as higher base effects from a strong 2014 take hold.

BMI forecast 18% growth in passenger car sales in 2014 on the back of the extension of the vehicle scrappage scheme (PIVE). We believe ongoing government support the the PIVE subsidy program and improving consumption metrics will ensure strong sales continue into 2015 and forecast a growth of 6.3% for the passenger car segment that year.

BMI forecast 33% growth in the light commercial vehicle (LCV) segment and 25% growth in heavy truck sales in 2014. Over 2015, we forecast LCV sales to slow to a 7.0% expansion and for heavy trucks to expand by a more modest 1.8% as modest upticks...

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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

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Defence & Security

Spain Defence & Security

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BMI View:  In our view, Spain faces low security risks in terms of international conflict, interstate conflict and criminal activity. The country's high scores in our security risk ratings are bolstered by Spain's friendly relations with international states and European neighbours as well as its decreasing involvement in Afghanistan.

BMI's Spain Defence & Security report examines Spain's defence procurement priorities in detail. It also provides information regarding Spanish defence spending levels, the posture and doctrine of the country's armed forces and Spanish defence and security priorities.

We expect Spain to spend USD14.9bn on defence in 2014. On average, the country has spent USD12.9bn annually on defence between 2011 and 2013. The level of defence spending has fluctuated during this period as a direct result...

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Food & Drink

Spain Food & Drink

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BMI View: In line with the slight recovery in the economy, total food consumption (food and drinks, excluding alcoholic drinks) in Spain increased by an estimated 1.9% year-on-year (y-o-y) in 2014. Nonetheless, economic situation will remain subdued over the next several years due to structural issues in the labour market and ailing demand in the wider EU. Consequently, we see little optimism for Spain's food and drink market, which is expected to register only modest growth over our forecast period to 2018.

Headline Industry Data (local currency)

  • Food consumption growth year-on-year (y-o-y) in 2014: +1.9%; compound annual growth rate (CAGR) 2013-2018: +2.3%;

  • Per capita food consumption growth (y-o-y) in 2014: +1.6%; CAGR 2013-2018: +2.0%;

  • Soft drinks value sales...

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Freight Transport

Spain Freight Transport

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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...

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Infrastructure

Spain Infrastructure

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BMI View: Spain's construction sector is expected to recover to positive growth in 2015 after seven years of recession. Housing and rail, as well as rejuvenated confidence surrounding public works, are expected to be the key drivers of growth, with limited investment in the power sector anticipated owing to sharp policy changes. The recovery will be gradual, however, with the government's precarious fiscal position, a weakening eurozone outlook and a fragile economic recovery weighing on the industry.

Spain's construction industry has suffered a severe and extended recession - losing an estimated EUR62.5bn in industry value between 2008 and 2014. However, we anticipate growth will return in 2015, with 1.9% real construction industry value growth anticipated. Over our 10 year forecast, growth is expected to remain in positive territory, picking up pace over the coming years to average 2.5% per...

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Insurance

Spain Insurance

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BMI View: Spain's insurance market is one of the biggest in Europe and extremely well developed, with a number of large and well-capitalised multi-national insurers active in the country. While 2014 saw more positive results than the preceding years, moving forward we believe there is only limited scope for future growth as Spain's subdued domestic economic outlook continues to hamper wider growth in the insurance market.

Spain's insurance market, despite a series of consolidations in recent years, remains relatively fragmented, with a large number of companies active in both the life and non-life sectors. Most firms have maintained profits, despite contractions in premiums, by increasing efficiencies and reducing claims losses. New regulations being introduced under Solvency II may create scope for further market...

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Medical Devices

Spain Medical Devices

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BMI Industry View: The Spanish medical device market ranks fifth in Western Europe (WE) but per capita expenditure is low by WE standards. Most of the market is accountable to the public sector, which has been affected by cost-containment measures implemented in the National Health System (SNS) under Royal Decree Law 16/2012, impacting medical device expenditure. We forecast low market growth over the 2013-2018 period, as...

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Metals

Spain Metals

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BMI View: The outlook for Spain's metals sector is steadily improving once more, with production increases paving the way for a lagging uptick in production too. After a contraction in both domestic steel consumption and production of three and four years, respectively, from 2011 onwards, BMI   estimates a more positive environment of growth on both fronts going forward. Output in Spain returned to growth in 2013 with a 4.49% y-o-y increase in activity to 14,252,000 tonnes, followed by an estimated increase of 1.2% y-o-y in 2014 to 14,423,000 tonnes...

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Oil & Gas

Spain Oil & Gas

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BMI View: Although current domestic production of oil and gas is negligible, with imports meeting around 99% of current demand, we are witnessing a gradual but notable uptick in investment targeting Spain's upstream. The acceleration of onshore and offshore activity could cut Spain's hefty import bill, but there are political and regulatory risks that hold sizeable downside risks to both conventional and unconventional efforts. However, the environment ministry has recently allowed deepwater drilling off the Canary Islands, and the Supreme Court has granted Repsol the authorisation to start exploration after the permit had been legally challenged by local authorities. The local authorities had called for a referendum on November 23 2014. However the Madrid government...

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Petrochemicals

Spain Petrochemicals

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Spain is seeing a restructuring of its petrochemicals sector with a pick-up in merger and acquisition activity. This should encourage foreign investment and greater integration with global markets, according to BMI's latest Spain Petrochemicals Report.

The liquidation of La Seda de Barcelona (LSB) was completed in Q115 following the sale of its packaging subsidiary APPE to US-based Plastipak Packaging for EUR360mn. This follows the purchase of a PET polymer plant and a chemicals facility, both in Spain, for EUR29.4mn by the diverse Badajoz, Spain-based group Cristian Lay. Other PET plants in Italy and Turkey were sold to the leading global PET producer Indorama group of Thailand.

Meanwhile, Cepsa is in negotiation with a potential buyer of two polyethylene terephthalate (PET) and purified terephthalic acid (PTA) production plants, including...

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Pharmaceuticals & Healthcare

Spain Pharmaceuticals & Healthcare

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BMI View: The deterioration of the Spanish economy and the government's implementation of increasingly aggressive fiscal austerity policies that focus on cost containment in the healthcare sector seriously hinder the country's attractiveness to drugmakers. Despite calls made by companies for the implementation of a system that adequately rewards innovation and supports investment in future medicines, the government is likely to remain committed to fiscal consolidation and will continue to target the pharmaceutical sector - a large recipient of public healthcare expenditure.

Headline Expenditure Projections

  • Pharmaceuticals: EUR24.09bn (USD31.79bn) in 2013 to EUR23.03bn (USD30.85bn) in 2014; -4.4% in local currency terms and -3.0% in US dollar terms.

  • Healthcare...

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Power

Spain Power

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BMI View: Spain's electricity market is struggling in the face of a new regulatory environment and a sluggish economy. Keen to cut costs, the government has reduced renewable energy subsidies, but it risks the wrath of providers who invested in the market expecting high returns. Recently, US company NextEra filed a complained making it the fourth official complaint of this kind. In June 2014 the Government approved a retroactive policy to replace feed-in tariff in an attempt to bring down the rate of return on renewable investments from 20% to 7.5%. The new formulas and tables to be used in the renewable industry poses significant threats to the industry's growth. We expect non-hydro renewables capacity to grow by an annual average of 2.2% between 2014 and 2023; a marked slowdown from previous growth rates of 16.4% between 2004 and 2013...

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Renewables

Spain Renewables

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BMI View: Renewable energy continues to make a fundamental contribution to Spain's electricity mix and the country is a major renewables hub in Europe, in terms of total installed capacity. However, growth prospects are muted - as the uncertain regulatory environment, limited project pipeline and a clouded economic picture dampen the outlook.

A number of regulatory changes over 2013 and the beginning of 2014 have rocked Spain's renewables industry. Coupled with the country's depressed economic picture, these reforms have dented investor confidence and created difficulties for renewable energy operators.

Recent developments include:

  • The Spanish Wind Energy Association announced in July 2014 that only one wind turbine was installed during the first half of 2014, amounting to just 80KWh of capacity.

  • It was...

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Telecommunications

Spain Telecommunications

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BMI View: The mobile market exhibited its first signs of growth in the quarter ending September 2014, following consecutive periods of decline dating back to 2012. Although this was largely due to Vodafone absorbing the MVNO customers of Ono, the market would have expanded even when excluding this transaction. This points to a more positive outlook for the market, particularly with early returns on 4G investment proving to be strong. The rise of alternative operators through lower pricing strategies has also been a success story in Spain, however, these are increasingly disappearing as larger operators acquire them. We expect M&A trends to continue over the next year or two, as the telecoms sector is facing a slow recovery throughout mobile, fixed line, broadband and pay-TV.

Key Data

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Tourism

Spain Tourism

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BMI View : Spain has one of the most developed inbound tourism industries in the world, with a wide range of attractions and diversity of destinations. As with the rest of the country, the industry has had to recover following a difficult few year; but as key source markets such as the UK and Germany are expected to improve economically, we expect to see an increase in inbound arrivals as households have more to spend. Spain has also benefited from socio-political issues in other popular holiday destinations (such as Egypt and Turkey), encouraging people to spend their holidays elsewhere. On the downside, there is limited scope for...

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Water

Spain Water

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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...

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