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 abreast 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

BMI View:

Core Views

  • Spain's economy will return to growth in 2014, due to steady export growth and the progress made on corporate deleveraging. However, a more balanced recovery will be restricted by Spanish household's lack of progress paying down their debts, with much more pain ahead for Spanish consumers.

  • Spain's current account surplus will grow to 2.3% of GDP in 2014, as the country begins re-orientating its increasingly competitive goods exports back to its main trading partners in Europe. Although robust tourism will keep the current account in positive territory for the foreseeable future, inefficient use of these sustained surpluses will limit Spain's long-term growth potential.

  • Although Spain's budget shortfall will continue shrinking over the next few years, overly optimistic revenue and spending projections will contribute to the...

To read the full article Register for Free or Login

Spain Industry Coverage (18)

Agribusiness

Spain Agribusiness

BMI View:

BMI View:   Livestock prices have held up relatively well in the EU despite the impact of Russia's embargo, and Spanish pig carcass prices remain elevated compared to other EU producers, while pork exports further afield are going from strength to strength. We therefore expect to see continued growth for Spain's most important livestock commodity. Grain producers will be feeling less positive after a sharp drop in yields for wheat and barley and a fall in corn acreage due to irrigation concerns. We do not expect this to have any effect on livestock production , as other EU producers have enjoyed a strong harvest and will be looking to export feed grains. 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...

To read the full article Register for Free or Login

Autos

Spain Autos

BMI View:

BMI forecasts an 11.9% increase in vehicle sales in 2014. This comes from an expected 9% increase in the passenger car segment and 29.3% rise in commercial vehicle (CV) sales.

BMI forecast 9% growth in passenger car sales in 2014 on the back of the extension of the vehicle scrappage scheme buoying sentiment and pent-up demand from sustained declines in recent years, despite the country's weak consumer story dampening demand for big ticket purchases.

BMI forecast 30% growth in the LCV segment and 25% growth in heavy truck sales in 2014. We expect the country's construction and manufacturing sectors to remain lacklustre, but we believe that pent-up demand in the segment will help buoy the sector over the year.

BMI forecasts vehicle production in Spain to increase 8.6% in 2014. This comes from an expected...

To read the full article Register for Free or Login

Commercial Banking

Spain Commercial Banking

BMI View:

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

To read the full article Register for Free or Login

Defence & Security

Spain Defence & Security

BMI View:

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...

To read the full article Register for Free or Login

Food & Drink

Spain Food & Drink

BMI View:

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...

To read the full article Register for Free or Login

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...

To read the full article Register for Free or Login

Infrastructure

Spain Infrastructure

BMI View:

BMI View: Spain's construction sector is expected to post positive growth in 2015 following seven years of recession. The recovery will be gradual however, with the government's precarious fiscal position and a fragile economic recovery both weighing on the industry. Housing and rail are expected to be the key drivers of growth, with limited investment in the power sector anticipated owing to sharp policy changes.

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 from 2015, with 1.7% 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 year between 2015 and 2023.

...

To read the full article Register for Free or Login

Insurance

Spain Insurance

BMI View:

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...

To read the full article Register for Free or Login

Medical Devices

Spain Medical Devices

BMI View:

BMI Industry View:   The Spanish   medical device market ranks fif th 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 be en particularly affected by cost-containment measures   in the National Health System (SNS - Sistema Nacional de Salud)   since the impleme ntation of Royal Decree Law 16/2012, impacti ng medical device expenditure. We forecast low market growth...

To read the full article Register for Free or Login

Metals

Spain Metals

BMI View:

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   estimate s 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...

To read the full article Register for Free or Login

Oil & Gas

Spain Oil & Gas

BMI View:

BMI View:   Although current domestic production of oil and gas is negligible, with imports meeting around 98% 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 sizable downs 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 authoris ation to start exploration after the permit had been legally challenged by local authorities. Also, in November 201...

To read the full article Register for Free or Login

Petrochemicals

Spain Petrochemicals

BMI View:

Although the Spanish petrochemicals industry is approaching 2010 levels of output, the recovery is experiencing volatility with export markets in the eurozone expected to experience uncertainty in 2015, according to BMI's latest Spain Petrochemicals Report.

Local consumption is only showing modest growth while exports to the eurozone have not grown as fast as expected. As such, in the January-September period chemicals output grew by 3.5% year-on-year (y-o-y), while rubber and plastic production grew by 4.3%. Nevertheless, it is an improvement on 2013 levels where chemicals production shrank and rubber and plastic showed only modest growth rates.

The focus in 2014 was on the liquidation of La Seda de Barcelona (LSB) following its insolvency whose operations are expected to be completely sold off by end-Q115. In October 2014, it was reported that five companies and...

To read the full article Register for Free or Login

Pharmaceuticals & Healthcare

Spain Pharmaceuticals & Healthcare

BMI View:

BMI View:   Despite the Spanish economy returning to growth in 2014 and picking up steam heading into 2015, we believe that the country ' s pharmaceutical sector will not follow suit until 2018. Regardless of calls made by companies for the implementation of a system that adequately rewards innovation and supports investment in future medicines, the government will likely continue with its cost containment measures by targeting the healthcare sector and patients as it tries to reduce its expenditure on prescription drugs, creating a challenging environment for drug companies operating in Spain.

Headline Expenditure Projections

  • Pharmaceuticals: EUR24.09bn (USD31.79bn) in 2013 to EUR23.11bn (USD30.97bn) in 2014; -4.0%  in...

To read the full article Register for Free or Login

Power

Spain Power

BMI View:

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. This is reflected in our new estimates with a 11% reduction in the long term growth of the solar and wind power generation industries....

To read the full article Register for Free or Login

Renewables

Spain Renewables

BMI View:

BMI View:   Our view that renewable energy expansion in Spain would slow significantly is playing out, as just one wind turbine was reportedly installed in Spain during the first half of 2014. The regulatory environment for renewables remains extremely challenging for those companies operating in the industry , and domestic utilities continue to be hit hard.

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 just one wind turbine was installed during the first half...

To read the full article Register for Free or Login

Telecommunications

Spain Telecommunications

BMI View:

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

    ...

To read the full article Register for Free or Login

Tourism

Spain Tourism

BMI View:

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 e xpected 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 destinat ions (such as Egypt and Turkey), encouraging people to spend their holidays elsewhere . On the downside, there is limited scope for...

To read the full article Register for Free or Login

Water

Spain Water

BMI View:

BMI View: In spite of the tepid economic recovery and the ongoing demands for independence from the Catalan region, we have maintained our forecasts and continue to expect overall extraction and consumption levels to fall due to the dual effect of rising environmental awareness, shrinking household budgets and limited extensions of existing water networks due to lack of funds and an incoherent, under-regulated sector. 

Spain's economic recovery will remain unbalanced in 2014 and 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. This is continuing to act as a deterrent for potential investors and constricting the maintenance and modernisation of the water and wastewater services, as the government is overstretched and reliant on private sector and foreign...

To read the full article Register for Free or Login