The Spanish economy is strengthening structural transformations that are boosting business growth the positive outlook for the coming years. Most visible for families are those facing the labor market after the 2022 labor reform, such as the record pace of job creation or the decline in temporary employment.
But there are other unprecedented trends in our country that also promote the good health of the economy in general. For example, the strong increase in exports of non-tourism services since 2019. Or the significant increase in investments in 'intellectual property', also since the pandemic. Or the deleveraging of families and companies over the past ten years.
Next Tuesday, July 30, the INE (National Institute of Statistics) will publish the inflation data for this month of July and the National Accounts for the second quarter (i.e. GDP growth), and it is expected that both will continue to point in the same direction. In recent years, almost every figure has been a positive surprise, exceeding the expectations of national and international organizations and the coalition government itself leads the rest of the advanced economies.
It's not all good news. The problem of access to housing, which is directly linked to the stagnation of construction, the suffocation of inflationstill high structural unemployment, wealth and gender inequality overshadow the 'macro' performance. Meanwhile, companies, the most orthodox centers of analysis and neoliberal visions focus their criticism on the weak growth of labor productivity, thus denying the proposals to shorten the working day, to continue to increase the minimum wage (SMI) and the rest of the salaries or to strengthen taxes on corporate profits to improve the conditions of housing, the welfare state and public services.
The foreign sector
The 'boom' of tourism in Spain generates what economists call 'negative externalities', the largest expression of which is the 'rental for tourist use' and its impact on life in the neighborhoods of the major capitals and the main destinations prices on the housing market. According to the figures of the National Accounts, tourism exceeds the level before the historic COVID shock by 16 percentage points, as shown in the graph.
“There has been a greater influx of foreign tourists outside the summer season, a greater diversification of countries of origin and an increase in average spending per tourist. The gross domestic product of tourism, which measures the economic contribution of this activity to the GDP of the Spanish economy, amounted to almost 13% of total GDP in 2023, surpassing pre-pandemic records,” he summarizes. a recent report from the Independent Fiscal Responsibility Authority (AIReF).
Tourism is once again crucial to the importance of the foreign sector in the totality of activity and employment. However, other services have joined this 'engine' of the economy. “The export of other non-tourism services shows a clear dynamic [se puede observar en el gráfico]”the AIReF document continues.
“Since 2019, exports of non-tourism services have grown by 34.4%, with notable progress in telecommunications, computers and information and technical services related to trade and other business services. All this offsets the sluggishness that exports of goods are maintaining in a context of relative weakness of the eurozone economies, despite their most recent improvement, and of a gradual increase in protectionism and geographical fragmentation of world trade,” the Tax Authority said. .
Family and household debts
A major structural transformation has been the deleveraging of households and companies over the past decade, following the peaks of the real estate bubble. This trend allows us to rule out a new bubble or “imbalance,” as noted by the Minister of Economy, Trade and Business, Carlos Body.
Furthermore, it is striking that both households and companies have reduced their debts in Spain much more than in the Eurozone as a whole, as shown in the second graph of this information, which in both cases remains below.
Investment in intellectual property
The weakness of business investment is one of the major doubts about the development of the Spanish economy. Much of future growth depends on investment, and some sectors have not woken up since 2020. Mainly due to the increase in borrowing costs as a result of the interest rate hikes of the European Central Bank (ECB).
Not even with the stimulus provided by the implementation of the Recovery Plan, about which there is also uncertainty about its real impact on business. That same Friday, the government announced the payment by the European Commission of the fourth payment of European funds.
In this context, one of the investment destinations stands out above the rest, and as never before: that of “intellectual property products” – in the language of the INE –, which are directly linked to innovation, research and high-quality sectors with added value.
“In a context of solid structural growth, investment and private consumption will be the main drivers of demand between 2024 and 2027. The macroeconomic scenario assumes an acceleration of investment over the projection period, especially in capital goods, thanks to the recovery of business confidence and the continued momentum of the recovery plan,” explains the team of experts from the Ministry of Economic Affairs.
Working market
The big structural change in our economy is happening in the labor market. First of all because of the number of working people, which is renewed quarter after quarter. This Friday, according to the EPA (Active Population Survey)it was learned that at the end of the second quarter there were already 21.68 million in total.
Second, less uncertainty in general is key for overall household consumption, which is directly related to the decline in temporary employment and greater job stability – more permanent contracts – thanks to the 2022 labor reform.
But thirdly, also through increased job creation in the private sector with better salaries, such as 'professional, scientific or technical activities'.
Finally, AIReF points out that “two-thirds of EPA employment growth is concentrated among foreign workers and workers with dual nationality. This increase in labour supply could have consequences for real wage and productivity developments. In particular, at sectoral level, foreign and dual nationality workers have made a greater contribution to employment growth in sectors such as hospitality, transport and trade, construction, home services and industry. These sectors, with the exception of industry, are characterised by lower productivity levels.”
Of course, neither the weight of the public sector – which remains stable at 16% of total employment – nor that of the hospitality industry – which fluctuates between 8% and 9% – has increased.
“In the medium term, the deployment of the effects of the reforms will make it possible to make the decline in unemployment compatible with gains in purchasing power for employees and a reduction in the average working day. Integrating the expected effects of the planned reforms in the labor area into the macroeconomic scenario makes it possible to predict new employment peaks, continued growth in employees’ purchasing power and a reduction in the unemployment rate to figures below 9% in the future. of forecast”, describes the latest forecast report of the Ministry of Economic Affairs.