Foreign Investment in Spain Quadruples in June

Foreign Investment in Spain Quadruples in June

Foreign Investment in Spain Quadruples in June

Spain’s economic recovery continues to gather steam and recent data shows international investors are confident the turnaround is sustainable!

Foreign capital inflows more than quadrupled to 6.7 billion euros in June from the previous month, according to the Bank of Spain’s Balance of Payments report published in August. This compares with foreign capital outflows of over 541 million euros in June 2013, when Spain was still struggling to prove it could emerge from a deep five year downturn.

Portfolio investment was the main attraction for overseas investors in June, not surprising given the strong performance of Spain’s IBEX-35 blue chip share index over the last few months. But after shunning the Spanish stock market for the best part of four years, is it the right time for these investors to run with the bulls again? Most economists would say yes, citing expectations for accelerated GDP growth through the remainder of 2014 and 2015.

SPAIN RECOVERY LURES INVESTORS

Spain exited a two-year recession in late 2013, but it was still saddled with one of the highest jobless rates in the European Union. The good news came in the second quarter of this year when the unemployment rate fell below 25.0 per cent for the first time since the third quarter of 2012. Jobs are finally being created. And the government has played its part in making the labour market more efficient by offering a range of incentives to domestic and international firms who invest in businesses in Spain.

Exports have been the main driver of the economic revival, as Spanish goods and services have benefitted from increased competitiveness in Europe. Let’s not forget that Spanish manufacturing companies are amongst the best in the world. The country’s manufacturing sector expanded for the ninth straight month in August as new orders flooded in and, consequently, firms took on more staff.

TAKING A PUNT ON THE FUTURE

As the outlook improves for the Eurozone’s fourth largest economy, international investors are focusing on growth stocks like retail. One of the pillars of the Bank of Spain’s growth forecasts for this year and next is a stronger-than-expected revival in domestic demand and consumption. Banks are also on investors’ buy list after the financial sector‘s overhaul. Investors don’t like uncertainty so Spain’s commitment to reforms aimed at putting the economy back on track is good news and will ensure the continued support of foreign capital inflows.

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

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