The Spanish economy continues to advance at a dynamic pace, maintaining relatively high growth both from a historical perspective and in comparison with most developed economies. On the international stage, the economy is showing resilience as the effects of two major opposing forces – geopolitics and artificial intelligence – fully manifest. The optimism surrounding AI in the US stock market and its comparison with the dot-com bubble is one of the topics analysed this month, as well as the reasons why housing is one of the main concerns of European citizens. In Spain, we also address the Treasury’s funding needs and the relationship between company size or job tenure and wage incomes using anonymised internal data.
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Owning a second home is a widespread practice in Spain. In fact, second homes make up 14.6% of all Spanish housing, this figure exceeding 30% in some provinces. Where are these second homes located? What kind of household owns them? Understanding their distribution throughout Spain in relation to the usual place of residence is of great help in analysing the behaviour of the real estate market at a local level. Once again, we can use big data techniques to process the information and identify more complex dynamics than with traditional methods.
Spain’s agrifood sector is typically focused on exports: The range of agrifood products exported by Spain is getting wider and covering more destinations. However, another dimension should also be taken into account: export complexity, a concept that measures the knowledge intensity required to produce exported goods. Because not only the volume of exports is important but also what is exported.
In 2019, the positive trend will continue in the tourism industry although the past few years΄exceptional growth rates are expected to diminish, in line with the slowdown observed in 2018. The big challenge facing the industry will be to consolidate its excellent performance regarding inbound tourism over the past few years while shifting its focus onto higher value added segments.
2020 was a tough year for the tourism industry. All the data that became available at year-end show that the impact of the pandemic on the sector has been devastating. After a total standstill during the months of March, April and May 2020, tourism demand failed to pick up appreciably during the rest of the year, even during the summer months when the infection rate seemed to be under control. Moreover, the waves of COVID-19 occurring at the end of 2020 and beginning of 2021, together with the various measures to restrict movement and businesses, have kept tourist numbers at a minimum, aggravating the losses suffered by the sector.
The COVID-19 pandemic has highlighted the importance of the agrifood sector as a mainstay of the Spanish economy. During the months of lockdown, the entire food chain (which includes farmers, breeders, fishermen, cooperatives and the food industry, wholesalers, retailers, distributors and logistics operators) had to adapt quickly to secure the population's food supply. In retrospect, it is only fair to acknowledge the excellent response by the whole sector in tackling this challenge.
The increase in energy prices throughout 2021 as a result of the combination of the sharp rise in global energy demand (due to the reactivation of the economic cycle) and a certain weakness in supply (due to geopolitical problems and the change in the energy model towards non-fossil fuels) has led to a global energy shock. In 2022, the geopolitical context is putting extra pressure on international gas and oil prices, which could aggravate the already significant impact of the energy bill on Spanish industry. This article examines the specific impact of rising energy prices on manufacturing, analysing which sub-sectors are being most affected and to what extent they are exposed to more sustained pressure on energy prices.
Spain’s agrifood sector is facing a new trade scenario marked by the US tariff hikes, with the rate currently set at 15% for European products pending clarification regarding possible strategic exceptions. In a context of increasing protectionism and weakening multilateralism, the sector is seeking ways to adapt by diversifying its markets and pursuing bilateral agreements through the EU. The agreement with Mercosur opens up opportunities for key products such as olive oil, wine and pork meat, but it also poses risks for competition in sensitive sectors such as beef and rice. Despite this, the competitiveness and diversification of Spain’s agrifood sector places it in a favourable position to tackle this challenging environment.
This month we celebrate 500 issues of our Monthly Report by taking a deep dive into the current economic situation and focusing on other hot topics, ranging from the gold price rally and the depreciation of the dollar in the financial markets, to investor apathy in the US and India’s role as a player in the international economy. As for Spain, we stop to examine the financial solidity of the country’s firms and the recent growth of public consumption. Thank you for continuing to read our publication!
During yesterday's session, the Japanese equity index Nikkei-225 fell nearly 2% amid concerns over a potential currency intervention. Global stocks advanced modestly, as investors traded cautiously ahead of a heavy earnings calendar, with major tech firms reporting later this week (up to 33% of the S&P 500 capitalization reports this week).
Dossier
The recovery in comsumption
After the strong recovery undergone by the tourism sector last summer, the activity indicators published up to December showed no signs of slowing down. Demand, supply and prices all maintained the good performance observed in the summer and even continued to improve, further closing the gap with their pre-COVID levels. However, this positive trend has had to contend with another wave of COVID infections.
Yesterday's was a volatile session in the market, driven again by geopolitical developments the Middle East. It started with a risk-off tone, as Iran reportedly suspended its contact with the US in response to the Israelian attacks to Lebanon; however, later news reporting that Hezbollah was ready to agree to a ceasefire switched the market sentiment in late session.
The military conflict in Iran has reintroduced a significant source of uncertainty into an economic context which, until recently, had been showing notable resilience. The closure of the Strait of Hormuz and the resulting rise in energy costs necessitate a recalibration of the macroeconomic scenario, both globally and for the Spanish economy. In this edition of the Monthly Report, we present our updated forecasts for 2026 and 2027, analysing how this geopolitical episode is impacting financial markets, the international economy and the Spanish economy. The report is supplemented with other analyses of interest, such as the new (im)balances in the oil market; the impact of the inflationary spike on European households’ well-being; the exposure of Spain’s economic sectors to the energy shock; the persistence of the generation gap in income and wealth, and the challenges facing the public accounts and compliance with European fiscal rules.
Investors traded yesterday with most eyes on today’s US CPI report. Oil prices rose again after OPEC released its monthly report and kept its global oil demand forecast for the rest of the year and 2024 unchanged, despite Saudi and Russian cuts. Benchmark Brent ended the session at an annual high, fuelling concerns about inflation.
Investors traded cautiously ahead of today's release of the US jobs report. Other labor market data released yesterday, like the ADP report, showed non-farm private employment cooled in August, while weekly jobless claims fell, pointing to weakening demand in the labor market, although layoffs remain low.
Investors' risk appetite increased on Wednesday as the ADP jobs report for June surprised to the downside and the ISM services report came in below expectations at 48.8. Separately, the release of the latest FOMC minutes showed that Fed officials acknowledged a slight slowdown in the economy as well as easing price pressures.
A better-than-expected employment report in the US eased fears of a severe economic downturn, pushing expectations of a first Fed rate cut back one meeting to July and lowering total expected cuts in 2025 from four to three. Sovereign bond yields rose on both sides of the Atlantic following the report and stock markets rallied.
In the last session of the week, investor sentiment continued to improve amid a positive earnings season (51% of US companies reported a +10% surprise in earnings) and a mixed employment report in the US.
Investors' sentiment continued to improve yesterday following reports that Russia is willing to restart natural gas exports tomorrow, after the maintenance break. On monetary policy, a report suggesting that the ECB might consider a 50bp hike on Thursday pushed interest rates higher in the euro area.