Country Trade Risk Index (ERI): 96.75
Country risk reference rating: Level 5 (5/9)
Country Risk Outlook: Stable
Economic and trade risks
In 2012, Spain’s nominal GDP was 1.05118 billion euros, the real economic growth rate was -1.4%, the per capita GDP was 22,698 euros, and the inflation rate was 2.4%. Since the financial crisis, as housing prices have fallen, the Spanish economy has been hit hard. It is still at the center of the European debt crisis and faces many challenges such as rectifying the fiscal deficit, reducing public debt, restructuring the banking system, and reducing unemployment. In 2011, the Spanish economy experienced a brief rebound, but fell into recession again after the third quarter. Affected by government austerity policies and high unemployment, Spanish households have further tightened consumption. In the long term, declining investment has been the main cause of economic recession. External demand has played a positive role in driving economic growth for 11 consecutive quarters. In the first quarter of 2013, its driving effect on the economy reached 2.9 percentage points. Domestic demand fell by 4.9% year-on-year, with fixed asset investment falling by 6.5% year-on-year. In the next two years, Spain’s economic prospects are difficult to say optimistic.
Investment risk
Spain has stable politics, complete economic sectors, developed infrastructure networks, high-quality labor force, lower wage levels than other EU countries such as Britain, France, and Germany, and a good business and investment environment. According to the World Bank’s 2013 Doing Business Report, Spain ranks 44th among 185 economies in the overall ranking of business environment, down two places from the previous year. It ranks high in applying for building permits, tax burdens, cross-border trade and handling bankruptcy, but it ranks lower in starting a business and investment protection. Registering a company in Spain is expensive, slow and cumbersome. Starting a business in Spain takes an average of 28 days and 10 procedures, compared to the OECD average of only 12 days and 5 respectively.
Legal risks
Spain belongs to the civil law system. Laws related to foreign investment include the Foreign Investment Law, the Company Law, the Industrial and Intellectual Property Protection Law, and the departmental regulations on foreign investment of the Trade and Investment Department of the Ministry of Industry, Tourism and Trade. In April 1999, Spain promulgated the latest “Foreign Investment Law” to adjust the previous foreign investment policy, cancel the previous “prior verification mechanism”, and realize the complete free flow of foreign investment in Spain, so it is regarded as the most important in Spain. foreign investment laws. Generally speaking, foreign investments only need to be declared after completion, but there are two exceptions: first, when the investment comes from a tax haven, advance declaration is usually required; second, when the investment involves business fields directly related to national defense, and If the investor is a non-EU member state and the investment object is real estate where the diplomatic mission of that country is located, prior approval must be obtained.
The Spanish judiciary is independent and its legal status is authoritative. Overall, as Spain has continued to simplify business processes, improve transparency and work efficiency in recent years, its legal system has enhanced its role in promoting foreign investment.
Overall risk
Generally speaking, the political situation in Spain is basically stable. Spain is the fourth country in the Eurozone to apply for financial rescue, and the possibility of continuing to seek partial assistance from the Euro Stabilization Fund cannot be ruled out. Currently, protests and demonstrations in Spain have decreased, but in the context of the implementation of austerity policies, some corruption cases and illegal financial activities involving executives can easily cause social dissatisfaction.
Spain has gone from being one of the fastest-growing economies in the euro zone to one of those with a declining economy and many challenges. The Spanish economy is too dependent on real estate and construction, and this economic model has proven to be unsustainable. Although Spain’s foreign trade remains dynamic, consumption and investment are sluggish; the unemployment rate is at a record high, seriously affecting consumption.
Based on the analysis and assessment of the current overall situation, Spain’s country trade risk index (ERI) is 96.75, the country risk reference rating is 5 (5/9), the country risk level is medium to high, and the country risk outlook is stable .
