Bank of Spain States Investment is Growing

Bank of Spain States Investment is Growing

Bank of Spain States Investment is Growing

As Spain’s economy is set to enter a second year of recovery from a deep recession, the Bank of Spain  has rubber stamped many economists’ forecasts for accelerated growth in 2014 and 2015. Last month, the Madrid-based central bank revealed that the second quarter GDP expanded 0.5 per cent from the first quarter, when it rose 0.4 per cent. Domestic spending and business investment were the main growth drivers, leading the Bank of Spain to increase its 2014 economic growth estimate to 1.3 per cent compared to 1.2 per cent previously.

For 2015, it sees GDP growth gathering pace to 2.0 per cent compared with a previous 1.7 per cent estimate. So what’s behind the rebound in domestic consumption and investment?

According to the Bank of Spain, key factors include:
• The gradual improvement in consumer confidence
• The continued rise, albeit slight, in net job creation
• The government’s recent fiscal reform
• The easing of restrictions on bank credit

AN ATTRACTIVE BUSINESS CLIMATE

Over the last two years, Spain has been hit by austerity measures and reforms to beat the impact of the global crisis and the bursting of a decade-long property bubble. But the reforms have also had a positive outcome, reducing labour costs and increasing Spain’s competitiveness, which has fuelled investor interest in the tourism and automotive industries.

In the corporate arena, productive investment has risen as the recovery in investment in capital goods continues, ignited by the favourable trend in foreign orders and exports. But the 2013 Entrepreneurs Law and other government stimulus measures to provide financing for new technology start-ups have also contributed. This improved business climate is also attracting foreign investment, considered to be the cornerstone of sustained economic growth. Distressed Spanish real estate assets have been snapped up by overseas funds, a move which has helped clear out the property market and fuel renewed domestic investment in bricks and mortar.

INVESTORS FLOCK TO SPAIN ASSETS

Last year, Spain came number nine in the global ranking of countries which attracted the most foreign investment, according to the United Nations Conference on Trade and Development (UNCTAD). Investors are flocking to Spain’s assets, lured by fresh monetary stimulus from the European Central Bank.

Another incentive is the fall in borrowing costs to 2006 levels, when the euro-zone’s fourth largest economy expanded at an annual rate of 4 per cent. And the country’s benchmark IBEX-35 index has gained 32 per cent in the past twelve months.

M&A deals like Vodafone’s acquisition of ONO and investments by the likes of Bill Gates and George Soros all augur well for continued investor interest in Spain.

For information on investing in Spain, contact corporate law firm Argali Abogados.

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