Industrial production, Spain

In 2019, the Industrial Production Index in Spain (IPI) rose by an average of 0.6% yearon- year compared to the decline in the Eurozone (-1.7%). Nonetheless, this increase was 0.14pp lower than in 2018, and the lowest increase since 2014.

By sectors, the increase in production of capital goods (2.5% year-on-year) and consumer goods (1.4%) contrasts with a decline in intermediate goods (-0.8%) and energy (-0.4%).

By Autonomous Communities, the IPI rose the most in Navarra (9.8%), Murcia (7.5%) and Castilla-La Mancha (3.2%), while it fell in the Balearic Islands (-6.4%), Asturias (-4.2%) and Galicia (-3.9%).


Business loans, Spain

Lending to non-financial corporations decreased in 2019 by 0.7pp, to 0.5%1 year-onyear, amounting to a total of €892,830 million. This evolution is mainly explained by the decline in financing from abroad (-2.2% year-on-year) and credit institutions (-0.6%), which accounts for 87% of total loans. In contrast, debt securities (13% of total loans) increased by 13.9% year-on-year.


Corporate insolvencies, Spain

In 2020, according to the Coface Country and Sector Risk Barometer, the bankruptcy of companies in Spain will increase by 4% annually, unlike its reduction in 2019. This rate, which is 3pp above the Eurozone average (1%), places Spain among the economies with the worst business expectations in Europe, in line with the United Kingdom (4%), and only ahead of Turkey (5%) and Poland (9%).

According to Coface’s analysis, this evolution would be primarily justified by the high structural unemployment, the duality in the labour market, the low productivity, the small average size of the companies, the lack of fiscal consolidation, and the fragmentation of the internal market.


Economic sentiment, Eurozone

The economic and business sentiment in the Eurozone remains at record low levels against the backdrop of global economic slowdown and mounting uncertainty stemming from the possible impact of the coronavirus spread.

• The Sentix1 index of the Eurozone, after 3 consecutive months of increases, has dropped by 2.4 points to 5.2 (0.9 points above the analyst consensus forecast).

• The composite PMI increased for the second consecutive month to 51.3 points, although it remains at the 2013 levels. This evolution is on account of the stable demand for new orders in the services sector.

• Although the manufacturing PMI increased by 1.6 points to 47.9, it is still in the contraction zone since the past twelve months. Manufacturing production and demand for new orders continue to dwindle, albeit at a slower pace than at the end of 2019.


Effects of the US-China trade war

On January 16, after almost two years of escalating trade tensions, the US and China signed the first phase of the trade agreement. This implies the withdrawal of tariffs by the US in exchange for China’s commitment to increase its purchases of US products.

The agreement comes after the US goods and services trade deficit with China fell in 2019 for the first time since 2009. The reduction of 17.6% annually, equivalent to $74 billion, narrows this deficit to a total of $345.6 billion.

This evolution responds mainly to the impact of tariffs imposed by the US on imports from China, which were reduced by 16% annually (up to $452.2 billion). Thus, the share of China’s imports over total US imports decreased from 23% in 2018 to the current 18.1%.

On the other hand, US exports to China also reported an 11% decrease (up to $106.6 billion).


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