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SPAIN´S MARKET INTELLIGENCE REPORT – AGOSTO

 

IMF positions Spain as the world’s second fastest-growing industrialised economy

The International Monetary Fund (IMF) has maintained its April estimates for the Spanish economy, with an expected rebound for this year of 2.4% based on the good results of the foreign sector and, to a lesser extent, of investment in the first months of the year. This means that Spain is the second fastest growing major industrialised economy in the world, only behind the United States.

This expansion is 1.5 percentage points above the 0.9% forecast for the euro area, which confirms that Spain will continue to be the engine of European growth this year, ahead of Germany, France and Italy. The IMF praised Spain’s «brilliant» economic performance and reiterated its forecast of 2.1% growth in 2025.

Spain’s GDP grew by 0.8% in the second quarter of the year compared to the first quarter, beating analysts’ expectations, and a 2.9% over the same period from last year. Household consumption and investment slowed, government spending and external demand sustained the economy’s dynamism.

 

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Investment banks boost stock market gains by 900% in Spain

Revenue from transactions on the Spanish stock exchange soared in the second quarter. Banks in charge of placing and underwriting the share sale trades gained 61 million euros in the period, up by 1,120% compared to the same period from 2023. In the first half of the year they booked a 917% increase year-on-year.

In other words, investment banks have managed to make more money in Spain between April and June than in the preceding 10 quarters combined, reaching a record high since the beginning of 2021. This suggests that the revenue from the stock market business in 2024 will be significantly higher than in 2023 or 2022.

On the other hand, Spanish listed companies have handed out 25 billion euros in dividends in the first seven months of the year. 2024 is expected to be the fourth consecutive year in which shareholder remuneration will increase, exceeding 30 billion euros in 2023 and 30.5 billion euros in 2019. Thus, dividends could record its highest figure since 2014.

 

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Spanish energy policy triggers 35 billion euros in investments

Spain is preparing to make a major leap in the installation of renewable energy in the next five years. In just one year, both the Ministry of Ecological Transition and the Autonomous Communities have been able to process a total of 1,351 permits that could lead to the installation of around 46,714 MW of new capacity, as reported by Alter5, a platform specialised in the financing of renewables. This amount will imply an investment in Spain of around 35 billion euros.

All in all, the total capacity installed would more than cover the entire national consumption if it operates 100% of the time. The National Energy and Climate Plan  forecasts the installation of 33,640 MW until 2030, which means that the capacity currently in the final phase of processing will more than cover the target set by the government.

 

Spain’s economy thrives
despite political instability

Political analysis by Juan Francés, Partner

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Spain’s political uncertainty is heating up this summer. Some crucial events are sending the country deeper into the tense political situation the country has been undergoing for quite some time now.

On the one hand, the concessions the current President, Socialist Pedro Sánchez, has done to Catalan party ERC to have them support the appointment of Socialist Salvador Illa as regional President, has ignited a lot of criticism not only amongst the opposition Popular Party but even within the Socialist party itself.

Catalan Socialists won the Regional elections on May 12, but they did not have enough of the votes to rule by themselves. Therefore, they have had to negotiate with third-most-voted party, independentist left-wing, ERC – the second most voted one was also independentist party Junts – to add up enough of the regional parliament support to appoint a Socialist president.

Those negotiations have been tough, and the Socialist Party has had to do considerable concessions. According to the agreement reached, the Catalan government will now be allowed to leave the national taxation regime and be the sole collector of all taxes paid in the region, among other measures. This has caused great political unrest as it leaves Catalunya in a more favorable position compared to that from the rest of the Spanish regions.

One of the main consequences these concessions have is that it triggers the lack of support by most of the other parties in Congress, hindering the future approval of the General State Budget.

In addition, last July 30th, for the first time in Spain’s history, a Prime Minister has been interrogated by a judge at the Palace of Moncloa, the president’s official residence. Pedro Sánchez was questioned as a witness in the ongoing investigation of his wife, Begoña Gómez, for influence peddling. Sánchez invoked the spouse’s right not to testify against his wife.

Even if this process finally comes to nothing and Gómez is acquitted, both the President’s image and that of this Government have already been stained by the judicial investigation. Bear in mind that it was precisely a motion of censure following a corruption case what allowed Sánchez to become President in 2018 and put an end to the previous government, of the Popular Party.

Amid all this, the economy shows positive growth prospects, unaffected by national political ups and downs or the geopolitical tensions. Spain remains an attractive destination for investments, as the IMF recently confirmed.

The international organization maintains Spain among the countries with the highest growth in 2024 and 2025, raising its GDP growth projection by half a point to 2.4% for this year and 2.1% in 2025. Spain is thus the second fastest-growing major industrialized economy, surpassed only by the USA this year and Canada next year.

 
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