Spain’s huge German swing

Spain's huge German swingSpain’s financial image has undergone a radical overhaul for the better in the eyes of German companies and the numbers are being backed up by action.

In 2014, a survey showed that 80 per cent of German companies saw the situation in Spain as bad or very bad. Fast forward to 2016 and ninety per cent of companies value the situation as good or satisfactory.

This survey is conducted annually by the German Chamber of Commerce for Spain among its 837 members. The report states, ‘Export activity has influenced the current business situation and there are clear signs of recovery in the domestic market.’ This is the 13th time since 1993 that it has been presented by the German Chamber of Commerce. The group consulted comprises the core partners of the German chamber.

The report also shows that Germany is the country with the largest number of branches in Spain with a total of 1809, representing 17 per cent of foreign affiliates in the country.

CONFIDENCE

German confidence in the Spanish stock market is also seen to be high. Unlike countries such as France, the UK, the USA and Italy, Germany is keeping up high rates of investment. Sectors its investors have particular confidence in are the manufacture of vehicles, the sale and repair of vehicles and the production of pharmaceutical products. Respectively, Germany’s holdings in these markets are 44.4 per cent, 67 per cent and 36.9 per cent. These also happen to be very relevant areas for Spain and make up a large proportion of its exports and innovation.

Germany is responsible for nearly 14 percent of the number of jobs created by FDI, or Foreign direct investment.

German FDI is mostly concentrated in the areas of motor vehicle manufacturing followed by the wholesale and retail trade.

Looking at where that money is going to, Madrid and Catalonia account for over two thirds of gross investment received from Germany since 1993.

Overall, foreign companies perform well in Spain and are responsible for well over a million jobs which, in 2013, represented seven percent of employment.

THE PROGNOSIS

In 2014, when German confidence in Spain was low, its investment considerably decreased on figures published in 2013, dropping from 1,358 million to 408 million. However, in 2015, this number could be seen to be rising once again with 538 million invested that year.

Not only is Germany generally happy with the current state of the economy, but it expects the situation to continue to improve. The report says that most companies are optimistic for the short term up to 2017. They are more conservative in hopes for 2018-2019 but this is thought to be because once levels reach a high result, not much more improvement can be expected.

Moving onto actual action on the ground and how it could benefit individuals, the report says, ‘Forty per cent of companies expect an increase in employment and investments. The rest expect to at least maintain their level of employment and investment.’

For more information, please contact corporate law firm Argali Abogados

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