Investment (Bank of Spain)
Productive private investment in Spain has had a key role in our economic recovery, contributing to more than 20% of GDP growth between 2014 and 2016. By components, the greatest investment was in capital goods and transport material.
This investment dynamism was greater than that in the Eurozone, and has been accompanied by company debt reduction.
The main financial source for productive investment was gross savings, whose increase by 25% to 32% between 2011-16 can be explained by a jump in gross added value. Thus in recent years the sector has demonstrated financing capacity (savings > investment).
Gross fixed capital formation is still below the pre-crisis levels (35% of GVA as against 28% in 2016).
ECB financing survey
Between 2012-16 the percentage of Spanish companies with difficulties in obtaining bank financing dropped 24% to 11%. In addition, the weight of fixed income over the total debt increased from 4.9% in 2007 to 12.8% in 2016, although Spain is still far from countries with less dependence on
banking, such as the UK (28.1%) or the USA (43.6%).
Company results
During the first quarter of 2017, the gross value added (GVA) of the 865 companies analyzed by the Center for Balances of the Bank of Spain increased 1.1% year-on-year (+4.6% excluding the energy sector).
By sizes, the increase in GVA is greatest among the medium-sized companies (50-249 workers): 11.6%.
Oil market
Since January of 2017 the price of oil in the USA (WTI) and Europe (Brent) has dropped some 20% in spite of the extension of the OPEP agreement to cut back on petroleum production by 1.8 mbd until March of 2018. This situation is explained by:
• Greater production in the USA (9.35 mbd), principally through the strength of shale oil, which now makes up 60% of the country’s total offer
• The recovery of the largest oil field in Libya (Sharara) which means an additional 270,000 barrels per day.
• The end of military attacks in the Niger Delta.
• A greater drop than expected in petroleum demand in Asia.
Another indicator of the excess offer is the increase in the amount of petroleum stored in tankers, which is now more than 100 million barrels, according to Kpler.
Business sentiment
In June the IFO Business Climate Index reached 115.1, its highest level since 1991. This leading indicator of growth is based on the dynamism of private consumption and the labor market.
Likewise, the Bundesbank has indicated that the main risk for the German economy is the global situation.
Financial markets
The MSCI Emerging Markets Index, a point of reference for emerging markets, whose value is approximately 1.6 trillion dollars, decided to include 222 Chinese companies (A-shares) with a high stock value.
This inclusion is the result of the greater accessibility and importance of the Chinese stock market (the second largest in the world).
The MSCI says it could mean a potential entry of more than 17 billion dollars of new inflows into China.
