Monthly survey on the state of the Spanish and international economy

1. ESPA
SPAIN
GDP, consumption and investment
2014 ended with a growth in GDP of 1.4%
and an increase of 2% year-on-year in the
fourth quarter. The acceleration is based on
the recovery in consumption and invest-
ment.
Private consumption grew 0.9% in the
fourth quarter, reaching a year-on-year
growth of 3.1%. By contrast, public spend-
ing, with nine straight months of decline,
dropped by 1% in the last quarter of the
year.
Total investment increased 1.4% between
October and December, in the following
ways:
• Investment in capital goods: 1.9%
(10.3% year-on-year).
• Investment in construction: 1.4%, for
three consecutive periods of growth.
Spanish R&D
The most recent report from the Cotec
Foundation about the Spanish research and
development sector in 2013 reveals a drop
of total investment in R&D, both public
(-5.7%) and private (-1.5%). For the first
time, private financing of R&D is greater
than that in the public sector.
Between 2008 and 2013, the accumulated
reduction was:
With regard to R&D spending, it dropped
2.8% (by -3% in the public sector and -2.7%
in the companies), finishing at 1.24% of
GDP, below the European target of 2% for
2020.
EUROZONE
France improves consumption
For 2015, France’s INSEE (National Insti-
tute of Statistics and Economic Studies)
predicts a growth in GDP for the Eurozone
of 1%, with an increase of 0.3% in each of
the first two quarters to achieve 0.7% by
mid-year.
This improvement will come from a drop in
the price of petroleum and lower taxes,
which is stimulating consumption and
economic activity throughout Europe.
In addition, the INSEE points to the posi-
tive measures of the France’s Pact of Re-
sponsibility, outstanding among which are
the tax benefits to increase hiring, which
could create 80,000 jobs in a year while also
improving company profits and investment.
Use of Greek rescue funds
According to data from Yiannis Mouzakis
(of the Macrópolis think tank), 51% of the
funds that Greece has received from the
-11,5
-17,1
-8,7
14,3
-20
-16
-12
-8
-4
0
4
8
12
16
TOTAL Public Private Foreign
Development of financing for R&D
during the crisis
Variation in % 2008-2013
Source: COTEC
31,9%
18,9%
18,0%
15,9%
10,6%
3,8%
0,9%
Use of Greek rescue funds
% of the total = 254,900 million euros
Repaymentofdebt
Capitalizationofbanks
Buyingdebt
Interestpayments
Government
spending
IMF
payments ESM capital
Source:Macropolis
Así está…
The economy
March 2015
1
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2. Eurozone and the IMF will go to paying
back national debt:
• 31.9% (81,300 million) at expiration of
notes and bonds;
• 15.9% (40,600) to interest;
• 3.8% (9,600) to paying the IMF.
Likewise, 18.9% (48,200) was used to re-
capitalize financial institutions, 18% for the
purchase of debt (45,900) and 10.6%
(27,000) for the operational needs of
Greece.
INTERNATIONAL
Global debt
According to the McKinsey Global Insti-
tute report Debt and (not much) deleveraging
(February 2015), between the start of the
economic crisis in 2007 and 2014, global
debt (of the 47 countries analyzed) has
grown by 40%, 57 billion dollars (17 points
of the GDP), principally in the advanced
countries and because of the public sector.
Ireland (+172 p.p.), Singapore (+129 p.p.),
Greece (+103 p.p.), Portugal (+100 p.p.),
China (+83 p.p.) and Spain (+72 p.p.) are
the countries where the total debt (not
counting the financial sector) has grown
the most.
In the case of China, its debt quadrupled
between 2007 and 2014 (from 7.4 bn $ to
28.2 bn $), fundamentally in the real estate
sector (50% of the loans) and in shadow
banking (50% of the new loans). While this
level of debt is not among the highest, it is,
at 282% of the GDP (including financial
institutions), above that in Germany (258%
of the GDP) and the USA (269% GDP).
Japan
The Japanese economy is growing again
following the increase of the VAT in April
of 2014 (from 5% to 8%), a move aimed at
reducing public debt (from 230% of GDP at
the end of 2013) and guaranteeing the con-
tinued financing of social security. Prelimi-
nary data from the government indicates an
advance in GDP in the fourth quarter of
2014 of 0.6% quarter-on-quarter and of
2.2% year-on-year, with the result that the
country’s economy is coming out of its
fourth recession in the last six years.
This upturn is largely explained by an in-
crease in exports (2.7% quarter-on-
quarter), which have been favored by the
weakness of the yen and by greater demand
from overseas, especially the US and the
rest of Asia.
By contrast, domestic consumption, which
accounts for 60% of the economy, only in-
creased by 0.3%. Public investment grew
0.6% and private investment by 0.1%.
20
37 45
22
33
58
26
38
56
19
33
40
4T2000 4T2007 2T2014
Global debt
Bn $
Families
Non-financial
companies
Public sector
Financial sector
87
142
199
Source:McKinsey Global Institute
400
390
382
327
325
317
313
302
290
259
Japan
Ireland
Singapore
Belgium
Netherlands
Greece
Spain
Denmark
Sweden
Italy
Debt. Top 10 advanced and
developingeconomies
% GDP, excluding financial sector
Economías avanzadas
Source: McKinsey, 2015
225
222
217
187
178
136
134
133
128
128
Hungary
Malaysia
China
Thailand
Israel
Chile
Poland
South Africa
Czech Rep.
Brazil
Developing economies
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