51
Círculo de Empresarios Madrid, October 2017 Quarterly report on the global and Spanish economy Q3-2017
Círculo de Empresarios
Madrid, October 2017
Quarterly report on the global
and Spanish economy
Q3-2017
GDP growth outlook
Source: Círculo de Empresarios based on IMF, 2017
2017
3.2
3.6-3.3
3
1.52.2
2.5
1.8
-0.2
1.820162017
2.1
Annual
change
World
2018
3.7
11.5
6.76.8
-2.2
1.53
7.16.7
2016
-3.6
0.7
1.81.7
Forecast
Source: Círculo de Empresarios, 2017 4
Geopolitical events
Geopolitical risks dominate the actual scenario
North Korean crisis threats global stability
Brexit: Slower negotiations between UK and the EU
US-China trade disputes
Catalonia Independence challenge
Source: Círculo de Empresarios, 2017 5
Global strengths and weaknesses
Strengths Weaknesses
Source: Círculo de Empresarios based on IMF, Markit and BlackRock, 2017 6
Steady GDP growth
PMI and GDP data suggests a more synchronised growth
Forecast
54
Global PMI composite* (September)
Greater than 60% of the countries
presented a PMI higher than 50
*Data > 50 indicates expansion
2,1 2,2
1,72,2 2,0
4,74,3 4,3
4,6 4,9
0
1
2
3
4
5
6
2014 2015 2016 2017 2018
Real GDP growth
%Advanced Emerging Global
Source: Círculo de Empresarios based on IMF, 2017
7
Share of world GDPEmerging countries continue increasing its share of global GDP
2000 2017
7.4% 18.3%
4.2% 7.5%
20.6% 15.2%
Share of global GDP (ppp)
63,6
40,6436,4
59,4
30
35
40
45
50
55
60
65
70
Share of global GDP (PPP)% total
Advanced Emerging
World trade recovery
Source: Círculo de Empresarios based on IMF and WTO, 2017 8
After 2 years of weak trade, it gains momentum
Global trade intensity diminished to A ratio of 1:1, but it is picking up
Global exports share
1.
2.
3.
4.
5.
China
US
Germany
Japan
Netherlands
13.2
9.1
8.4
4
3.6
16. Spain 1.8 (1.7)
(8.1)
%
(3.8)
(3.4)
(9.1)
(13.8)
In brakets, 2015 data
-1
0
1
2
3
4
5
6
-15
-10
-5
0
5
10
15
Global trade growth% annual
Global trade (lef axis)
Real GDP (right axis)
Global inflationLower price pressures
Source: Círculo de Empresarios based on JP Morgan, 2017
January-17 February-17 March-17 April-17 May-17 June-17 July-17 August-17
Global 2,3 2,1 1,9 2 1,8 1,7 1,7 1,9
Advanced 2 2,1 1,8 1,9 1,6 1,4 1,6 1,7
Emerging 3,2 2,4 2,5 2,6 2,6 2,5 2,4 2,7
US 2,5 2,7 2,4 2,2 1,9 1,6 1,7 1,9
Canada 2,1 2 1,6 1,6 1,3 1 1,2 1,4
Japan 0,5 0,2 0,2 0,4 0,4 0,3 0,5 0,5
UK 1,8 2,3 2,3 2,7 2,9 2,6 2,6 2,9
Spain 2,9 3 2,1 2,6 2 1,6 1,7 2
Germany 1,9 2,2 1,5 2 1,4 1,5 1,5 1,8
Eurozone 1,8 2 1,5 1,9 1,4 1,3 1,3 1,5
France 1,6 1,4 1,4 1,4 0,9 0,8 0,8 1
China 2,5 0,8 0,8 1,2 1,5 1,5 1,4 1,8
India 3,2 3,7 3,9 3 2,2 1,5 2,4 3,4
Mexico 4,7 4,9 5,4 5,8 6,2 6,3 6,4 6,7
Source: Círculo de Empresarios based on IMF and BlackRock, 201710
China’s growth surprised to the upside (I)
After growing 6.7% in 2016, China’s forecasts has been revised up
China’s GDP forecasts for 2017
January 2016 IMF outlook
6%
6.5%
6.8%
Note: In 2016 (in current prices), China’s GDP size was the equivalent of 12 emerging countries: India, Brazil, Russia, Mexico, Indonesia, Turkey, Saudi Arabia, Argentina, Poland, Iran, Thailand and Nigeria
January 2017 IMF outlook October 2017 IMF outlook
-10,0
-5,0
0,0
5,0
10,0
15,0
20,0
China's external sector% annual change
Exports Imports
Source: Círculo de Empresarios based on Reuters and Safe, 2017 11
The external sector shows national and international demand recovery while
capital outflows stabilized
Note: According to Pimco,during the first 3 quarters of 2017, emerging Asia has received inflows of aproximately 90 billion $ (specially fixed-income)
During 2016, yuan deppreciates 7%
China’s growth surprised to the upside (II)
2,9
3,1
3,3
3,5
3,7
3,9
4,1
Ma
r-12
Ju
n-1
2
Se
p-1
2
De
c-1
2
Ma
r-13
Ju
n-1
3
Se
p-1
3
De
c-1
3
Ma
r-14
Ju
n-1
4
Se
p-1
4
De
c-1
4
Ma
r-15
Ju
n-1
5
Se
p-1
5
De
c-1
5
Ma
r-16
Ju
n-1
6
Se
p-1
6
De
c-1
6
Ma
r-17
Ju
n-1
7
Se
p-1
7
China's currency reservesTrillion $
Source: Círculo de Empresarios based on Pimco, Conference Board and Bloomberg, 2017 12
... Although still faces challenges (III)
Corporate debt: 159% of GDP
Economic transition
North Korea tensions
US trade policy
China’s risks Chinese debt composition% GDP
37
45
159
Corporates Government
Families
Africa: population (I)
Source: Círculo de Empresarios based on UN, 2017
Africa will represent approximately 50% of global population growth between
2017-2030
1,256 million people
16.6% of global
population
60% < 24
years
2017-2030: +448 million
2017
Population (million) 2017 2030
World 7,55 8,55
Africa 1,26 1,70
Asia 4,50 4,95
Europe 742 739
Latam and Caribbean 646 718
North America 361 395
Oceania 41 48
1.173
3.922
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Sub-Saharan Africa GDP per capita $ PPP
Source: Círculo de Empresarios based on AFDB, IMF, 2017
X 3.3
Poverty in Africa has decreased since 90th centruy, although it remains at high
levels
Africa: poverty and economy (II)
20
25
30
35
40
45
50
55
60
1990 1995 2000 2005 2010 2015 2020 2025 2030
Share of african population living with an income <
1.25$
0
20
40
60
80
100
120
140
160
180
200
Nigeria: society (I)
Source: Círculo de Empresarios based on Worldometers, United Nations, 2017
➢ 2017 population : 191 million
➢ Most african country populated and
the 7th in global terms*
Nigeria population
Million
➢ 41% illiteracy
➢ IDH: 0.527 (0.884 Spain)
1 China 1,409.51 11 Japan 127.484
2 India 1,339.18 12 Ethiopia 104.957
3 US 324.459 13 Philippines 104.918
4 Indonesia 263.991 14 Egypt 97.553
5 Brazil 209.288 15 Vietnam 95.541
6 Pakistan 197.016 16 Germany 82.114
7 Nigeria 190.886 17 Congo 81.34
8 Bangladesh 164.67 18 Iran 81.163
9 Russia 143.99 19 Turkey 80.745
10 Mexico 129.163 20 Thailand 69.038
Source: Círculo de Empresarios based on IMF, 2017
Biggest african economy and the 23rd of the world. Pwc estimates
that Nigeria will stand in the 16th position by 2030
Nominal GDP (current billion $) Nominal GDP per capita(current $)
2,123$
5,600$
Nigeria: economy (II)
0
100
200
300
400
500
600
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
Nigeria South Africa
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
Nigeria South Africa
Source: Círculo de Empresarios based on CIA. PWC. 2017
High oil dependence
➢ Energy products account 90% of total exports
➢ 76% of total public income
➢ World’s 10th largest country by proven oil
reserves
➢ Biggest oil producer in Africa
Urbanization increases at an annualpace of 3.5%➢ 40% of nominal GDP
Services: 60% del PIB Industry: 19% del PIB
Primary: 21% del PIB
GDP composition
Employment composition
Primary: 70%
Industry: 10%
Services: 20%
Nigeria: economy (III)
60%19%
21%
Million barrels
1 Venezuela 300
2 Saudi Arabia 269
3 Canada 171
4 Iran 157
5 Iraq 143
6 Kuwait 104
7 UAE 98
8 Russia 80
9 Lybia 48
10 Nigeria 37
US: hurricane costs (I)
Source: Círculo de Empresarios based on ISM and FT, 201718
Slightly short term economic impact, but confidence remains solid
0 50 100 150 200 250
2017 Harvey
2012 Sandy
2008 Sichuan
1995 Kobe
2005 Katrina
2011 Tohoku
Pérdidas económicas estimadasMiles de millones $Estimate economic lossesBillion $
US Manufacturing ISM
45
47
49
51
53
55
57
59
61
63
US: economic growth upturn (II)
19Source: Círculo de Empresarios based on BEA and JP Morgan, 2017
1.5
2.3
Real GDP growth
%
2016
2Q- 2017
8 consecutive years of economic growth (3rd largest expansionary period)
1.2
3.1
1Q- 2017
2.2
2017 IMF forecastGDP composition2Q- 2017. Nominal Tn $
69,117,3
12,7
3,8 -2,9
Private consumption Public consumption
Investment (no construction) Construction
Net exports
-50
0
50
100
150
200
250
300
350
Jan
-16
Feb
-16
Ma
r-16
Ap
r-1
6
Ma
y-1
6
Jun
-16
Jul-16
Au
g-1
6
Se
p-1
6
Oc
t-1
6
No
v-1
6
De
c-1
6
Jan
-17
Feb
-17
Ma
r-17
Ap
r-1
7
Ma
y-1
7
Jun
-17
Jul-17
Au
g-1
7
US net employment creationThousands
US: strengthening of the labour market (III)
20
Source: Círculo de Empresarios based on BLS and JP Morgan, 2017
Nominal wages rose 2.5%
+2 million employees
Harvey impact
5,0
7,3
9,99,3
8,57,9
6,75,6
5,0 4,7 4,2
0
2
4
6
8
10
12
US unemployment rate% labour force
35.615
65.481
92.525
High School graduate Bachelors degree Advanced degree
Average annual earnings by formation
$
US: core inflation stabilized (IV)
Source: Círculo de Empresarios based on BLS and Federal Reserve, 201721
1.9
1.5
2017
2018
FED outlook
Core inflation remains steady although headline index increases due to higher fuel
prices (75% of growth)
Core inflation forecasts
Annual change, %
0,5
1,0
1,5
2,0
2,5
3,0
Jan
-16
Feb
-16
Ma
r-16
Ap
r-16
Ma
y-16
Jun
-16
Jul-16
Au
g-1
6
Sep
-16
Oc
t-16
No
v-1
6
De
c-1
6
Jan
-17
Feb
-17
Ma
r-17
Ap
r-17
Ma
y-17
Jun
-17
Jul-17
Au
g-1
7
Sep
-17
US inflation rateAnnual change
Headline Core
0
1
2
3
4
5
6
7
Ju
l-00
Ma
y-0
1
Ma
r-0
2
Ja
n-0
3
No
v-0
3
Se
p-0
4
Ju
l-05
Ma
y-0
6
Ma
r-0
7
Ja
n-0
8
No
v-0
8
Se
p-0
9
Ju
l-10
Ma
y-1
1
Ma
r-1
2
Ja
n-1
3
No
v-1
3
Se
p-1
4
Ju
l-15
Ma
y-1
6
Ma
r-1
7
Fedral funds rate
%
0
0,25
0,5
0,75
1
1,25
1,5
1,75
2
2,25
US: the Fed begin to reduce its balance sheet (V)
Source: Círculo de Empresarios based on Federal Reserve, 2017
22
Market perceives 80% probabilities of an interest rate hike in December
Fed dot plot%
September 2017June 2017
EU: solid recovery and economic dynamism (I)
23Source: Círculo de Empresarios based on IMF and Eurostat, 2017
2
2.32.1
Real GDP growth
%
2016
2017
2018
Unemployment rate% labour force 7.6
National demand supports economic growth
-1 pp since 2016
-2,5
-2
-1,5
-1
-0,5
0
0,5
1
1,5
2
EU current account balance% GDP
EU: external sector success (II)
24Source: Círculo de Empresarios based on Ameco, 2017
Surplus
Deficit
Exports momentum continue improving the external balance
2.000
3.000
4.000
5.000
6.000
7.000
8.000
EU goods and services exportsBillion €
-1,0
-0,5
0,0
0,5
1,0
1,5
2,0
2,5
en
e.-
15
ma
r.-1
5
ma
y.-
15
jul.-1
5
sep
.-1
5
no
v.-
15
en
e.-
16
ma
r.-1
6
ma
y.-
16
jul.-1
6
sep
.-1
6
no
v.-
16
en
e.-
17
ma
r.-1
7
ma
y.-
17
jul.-1
7
sep
.-1
7
HICP* 2015-16Annual change
Headline Core
Source: Círculo de Empresarios based on Eurostat and ECB, 2017
Eurozone: prices
25
Inflation remains steady, below the ECB target and is expected to have a V-
shaped path in the next years
ECB target
1.2
Eurozone inflation forecast%
1.5 1.5
2017
2018
2019
1
1,05
1,1
1,15
1,2
1,25
ECB: QE gradual reduction
26
Longer QE but at lower level 30 billion € monthly purchase asset
Eur/Usd ECB balance sheetTrillion €
Concers about recent
currency volatility
Source: Círculo de Empresarios based on ECB, 2017
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
Au
g-0
7
Ma
y-08
Feb
-09
No
v-0
9
Au
g-1
0
Ma
y-11
Feb
-12
No
v-1
2
Au
g-1
3
Ma
y-14
Feb
-15
No
v-1
5
Au
g-1
6
Ma
y-17
-1,0
,0
1,0
2,0
3,0
4,0
5,0
6,0
Oc
t-07
Ma
r-08
Au
g-0
8
Jan
-09
Jun
-09
No
v-0
9
Ap
r-10
Sep
-10
Feb
-11
Jul-11
De
c-1
1
Ma
y-12
Oc
t-12
Ma
r-13
Au
g-1
3
Jan
-14
Jun
-14
No
v-1
4
Ap
r-15
Sep
-15
Feb
-16
Jul-16
De
c-1
6
Ma
y-17
UK: prices and economic growth
27Source: Círculo de Empresarios based on ONS, 2017
Negotiations remain stagnant
Monthly inflation rate% annual change
September inflation = 3%
1.8
1.6
1.8
1.5
Quarterly GDP growth% annual change
2016 3Q
2016 4Q
2017 1Q
2017 2Q
Brexit
20
25
30
35
40
45
50
55
60
65
70
Brent spot price ($)
Oil: slightly oil increase
Source: Círculo de Empresarios based on EIA and Bloomberg, 201728
Brent crude oil prices stabilized between 55-60$ waiting for the OPEC compliance
OPEC and non-OPEC countries producers achieved 120% compliance in September
-70%
-50%
-30%
-10%
10%
30%
50%
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
Rentabilidad anual del Brent 1987-2017
Fuente: Círculo de Empresarios a partir de EIA, 2017
Variaciones anuales
superiores al 20%
Forecast
Annual brent performance1987-2017
Years > 20%
Commodities
29Soruce: Círculo de Empresarios based on JP Morgan, 2017
Actual = 10 y low. level 10 y max. level
72.88 $
84.46$
47.70 $
237.95$
101.82$
48.63$
26.21 $
57$
145.29$
705 $ 1.892$
1.280$
Bloomberg
Commodity Index
Agriculture
Crude
Gold
Commodity prices
-0,77%
-2,20% -2,70%
-5,30%
-13%Argentine Peso Brazilian Real Chinese Yuan Indian Rupee Mexican peso
Dollar performance against emerging
currencies, Max 2017-July 2017
5%
3,60%3,30%
-3,00%
Swiss Franc Euro Sterling pound Japanese Yen
US dollar performance against the most
traded currencies, Max 2017- July 2017
Foreign Exchange market
Source: Círculo de Empresaios based on Bloomberg, 2017
30
U.S dollar appreciated against the main currencies in the world
Financial markets: equities
Source: Círculo de Empresarios based on Bloomberg, 2017 31
Positive performance of equity markets
* Until 15 September
2013 2014 2015 2016 2017*
Global 24,1 2,9 -2,7 5,3 13,5
Eurostoxx 50 17,9 1,2 3,8 0,7 6,8
Euronext 100 19 3,6 8 3 8,8
Dax 30 25,5 2,7 9,6 6,9 9
Cac 40 18 -0,5 8,5 4,9 7,2
Mib 30 16,6 0,2 12,7 -10,2 15,6
Ibex 35 21,4 3,7 -7,2 -2 10,3
FTSE 100 14,4 -2,7 -4,9 14,4 1
Dow Jones 26,5 7,5 -2,2 13,4 12,7
S&P 500 29,6 11,4 -0,7 9,5 11,7
Nasdaq 38,3 13,4 5,7 7,5 19,8
Nikkei 225 56,7 7,1 9,1 0,4 4,2
100
105
110
115
120
125
130
135
Global and emerging equity marketsJanuary 2017= 100
Advanced Emerging
Tailwinds
33
Lower macroeconomic imbalances
Employment creation
Lower private indebtedness
Better financing conditions and monetary stimulus
Good behaviour of external sector
Forecasts: the expansion continues… … but at a moderate pace
34
20182019
2017
3.2%3%
2.6%
Source: Círculo de Empresarios based on Bank of Spain, September 2017
The Spanish government predicts an increase in GDP of 3.1% in 2017 and cuts its forecast for 2018 from
2.6% to 2.3% because of rising political tensions in Catalonia (= 19% of Spanish GDP)
Airef: “1pp decrease in Catalonia growth results in an aditional decline of 0.2 pp in Spanish growth”
IMF keeps its forecast for 2017 (3.1%) and increase the one for 2018 to 2.5% (without taking into account
the effects of secessionist challenge)
Forecasts 2017: composition of growth
2017 GDP annual change = 3.1%
• Private consumption = 2.4%
• Public consumption = 0.8%
• Gross fixed capital formation = 4.3%
Domestic demandGoods and services
% annual change
2.5 ppgrowth contribution
Source: Círculo de Empresarios based on Bank of Spain, September 2017 35
0.6 pp
External demandGoods and services
% annual change
growth contribution
• Exports = 6.4%
• Imports = 5%
Current growth
Spain keeps the positive spread
growth with the OECD and the
Eurozone
External demand: 6th consecutive
quarter of positive contribution
36Source: Círculo de Empresarios based on Bank of Spain, Eurostat and OECD, 2017
Q3 2017 → Spanish GDP increased by 3.1% in annual terms
(Bank of Spain and National Statistical Institute – NSI)
-8
-6
-4
-2
0
2
4
GDP (annual change) and contribution of
domestic and external demand (pp)
Spain domestic demand
Spain external demand
Spain GDP
Eurozone GDP
OECD GDP
Labour market (I)
37Source: Círculo de Empresarios based on NSI, 2017
Unemployment recovers
levels of 2009
16.38% of labour force =
3,731,700 unemployed
Labour Force Survey - Q3 2017 (NSI)
After 8 years, the number of occupied persons has again overcome 19 millions
Ocuppied = 19,049,200
✓ Private sector = 15,987,200
✓ Public sector = 3,062,100
17,24
26,94
16,38
19.284,4
19.098,4
16.950,6
19.049,2
15,0
17,0
19,0
21,0
23,0
25,0
27,0
29,0
15.500
16.000
16.500
17.000
17.500
18.000
18.500
19.000
19.500
20
09
Q1
20
09
Q2
20
09
Q3
20
09
Q4
20
10
Q1
20
10
Q2
20
10
Q3
20
10
Q4
20
11
Q1
20
11
Q2
20
11
Q3
20
11
Q4
20
12
Q1
20
12
Q2
20
12
Q3
20
12
Q4
20
13
Q1
20
13
Q2
20
13
Q3
20
13
Q4
20
14
Q1
20
14
Q2
20
14
Q3
20
14
Q4
20
15
Q1
20
15
Q2
20
15
Q3
20
15
Q4
20
16
Q1
20
16
Q2
20
16
Q3
20
16
Q4
20
17
Q1
20
17
Q2
20
17
Q3
Occupied and unemployment rate, Q1 2009 - Q3 2017
Thousand; % labour forceUnemployment rate (right)
Occupied (left)
Labour market (II)
Unemployment rate in Spain = 17.1% of labour force
vs. Eurozone average = 9.1%
38Source: Círculo de Empresarios based on Eurostat, 2017
Unemployment rate in the European Union (August 2017, Eurostat)
7,69,1
17,1
0
5
10
15
20
25
Unemployment rate EU 28, August 2017
% of labour force
Labour market (III)
Unemployed
▲ 27,858 vs. August
▼ 310,115 vs. September 2016
Affiliates
▲ 26,318 vs. August
▲ 624,141 vs. September 2016
New contracts
= 1,993,267 in September
▲ 86,267 vs. September 2016
39Source: Círculo de Empresarios based on Ministry of Employment and Social Security, October 2017
Airef: “1% decrease in Catalonia employment results in a decline of 0,17% in the rest
of Spain and of 0,21% in total Spanish employment”
Affiliates to Social Security and unemployed (September 2017, SEPE)
19.377.776
16.393.866
18.336.161
1.965.869
4.763.680
3.410.182
0
1.000.000
2.000.000
3.000.000
4.000.000
5.000.000
6.000.000
16.000.000
16.500.000
17.000.000
17.500.000
18.000.000
18.500.000
19.000.000
19.500.000
20.000.000
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Jan
-17
Feb
-17
Ma
r-17
Ap
r-17
Ma
y-17
Jun
-17
Jul-17
Au
g-1
7
Sep
-17
Affiliates
Persons
Unemployed
Labour market (IV)
40Source: Círculo de Empresarios based on Bank of Spain, September 2017
▲ employment in services and ▼ in manufacture and primary sector
Employment by sectors
16,1
12,5
10,8
8,8 8,2 8,16,9 6,9
5,94,4 4,2
3,42,5
1,10,2
0
2
4
6
8
10
12
14
16
18
20
22
Employment by sectors% total
1993 2007 2016
September 2017:
▪Annual CPI increases to 1.8%, mainly
because energy and fresh food prices
evolution
▪ Prices are rising above the Eurozone
average, keeping a positive spread of
0.2 pp
▪Core inflation = 1.2%
41Source: Círculo de Empresarios based on NSI and Eurostat, 2017
Prices
October 2017:
▪ Estimated annual CPI = 1.6%
1,8
1,6*
1,21,4
-0,2
0
0,2
0,4
0,6
0,8
1
1,2
1,4
1,6
1,8
2
2,2
2,4
2,6
2,8
3
General and core inflation
% annual change
CPI Spain
Core CPI Spain*
CPI Eurozone
* Excluding energy and non-processed food
* Estimated
Financial conditions (I)
42Source: Círculo de Empresarios based on Bank of Spain, 2017
Note: Credit to households and business measured in stock terms
Credit to households and business increases
-7,0
-5,0
-3,0
-1,0
1,0
3,0
5,0
Au
g-1
4
Oc
t-1
4
De
c-1
4
Feb
-15
Ap
r-1
5
Jun
-15
Au
g-1
5
Oc
t-1
5
De
c-1
5
Feb
-16
Ap
r-1
6
Jun
-16
Au
g-1
6
Oc
t-1
6
De
c-1
6
Feb
-17
Ap
r-1
7
Jun
-17
Au
g-1
7
Credit to householdsStock; % annual change
Total
House purchase
Consumption and other
Consumption and others
▲ 4.4% last year
-10
-8
-6
-4
-2
0
2
4
6
Au
g-1
4
Oc
t-1
4
De
c-1
4
Feb
-15
Ap
r-1
5
Jun
-15
Au
g-1
5
Oc
t-1
5
De
c-1
5
Feb
-16
Ap
r-1
6
Jun
-16
Au
g-1
6
Oc
t-1
6
De
c-1
6
Feb
-17
Ap
r-1
7
Jun
-17
Au
g-1
7
Credit to businessStock; % annual change
Total
From resident entities
Other
Total credit decreases
Financial conditions (II)
43Source: Círculo de Empresarios based on Bank of Spain, 2017
Private debt keeps going down and public debt continues to increase
In August, public debt = 1,133,009 M€
Non-financialcompanies debt
83.6%
Households debt 63.6%
Q2 2017 (% GDP)…
58,054,2
51,347,6
45,342,3
38,935,6
39,5
52,8
60,1
69,5
85,7
95,5
100,4 99,4 99,099,9
99,8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Q1
2017
Q2
Public Administrations debt % GDP
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
Jan
-08
Jun
-08
No
v-0
8
Ap
r-0
9
Se
p-0
9
Feb
-10
Jul-10
De
c-1
0
Ma
y-1
1
Oc
t-1
1
Ma
r-12
Au
g-1
2
Jan
-13
Jun
-13
No
v-1
3
Ap
r-1
4
Se
p-1
4
Feb
-15
Jul-15
De
c-1
5
Ma
y-1
6
Oc
t-1
6
Ma
r-17
Au
g-1
7
Non-financial sectors debtMillion €
PPAA
Non-financial corporations
Households
National Accounts
44
2017*: forecastSource: Círculo de Empresarios based on IMF, 2017
Public deficit 2018
The Spanish government has
increased its forecast from 2.2% to
2.3% due to the impact of the
political situation in Catalonia and
the absence of budget for 2018:
→ General Government = - 0,8%
→ Social Security = - 1,1%
→ Autonomous Communities = - 0,4%
→ Local Entities = 0,0%
Source: Ministry of Economy, Industry and Competitiveness, 2017
-1,0-0,5 -0,4 -0,4
0,0
1,2
2,22,0
-4,4
-11,0
-9,4 -9,6
-10,5
-7,0
-6,0
-5,1
-4,6
-3,2
-12
-10
-8
-6
-4
-2
0
2
4
30
32
34
36
38
40
42
44
46
48
50
Public revenues and expenditures
% GDP Revenues
Expenditures
Balance
External sector (I)
45Source: Círculo de Empresarios based on Bank of Spain, 2017
Relevance of tourism
-30
-20
-10
0
10
20
30
40
50
Jun
-15
Jul-15
Au
g-1
5
Se
p-1
5
Oc
t-1
5
No
v-1
5
De
c-1
5
Jan
-16
Feb
-16
Ma
r-16
Ap
r-1
6
Ma
y-1
6
Jun
-16
Jul-16
Au
g-1
6
Se
p-1
6
Oc
t-1
6
No
v-1
6
De
c-1
6
Jan
-17
Feb
-17
Ma
r-17
Ap
r-1
7
Ma
y-1
7
Jun
-17
Current account and capital balances
Bn €
Goods and servicies (except tourism)TourismIncomesCapital balanceSuperavit (+) / Deficit (-)
46
Trade balance, January – August 2017 (annual change)
Geographical distribution
(%)Exports
Imports
Source: Círculo de Empresarios based on Ministry of Economy, Industry and Competitiveness, October 2017
External sector (II)
Imp
ort
s
Capital goods
Chemical products
Energy
Exports ▲ 9.1% 182,302.1 M€
Imports ▲ 11.6% 198,716 M€
BALANCE ▲ Deficit 49.3% -16,413.8 M€▲ 35.5% energy
deficit
Top 3 sectors(% of total weight)
20.2
16.9
16.3
21.4
15.0
13.5
Exp
ort
s
Capital goods
Food
Automotive industry
-66.970,7
-16.413,8
-80.000
-60.000
-40.000
-20.000
0
20.000
40.000
60.000
80.000
100.000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Million € Exports Imports Balance
Europe
71,5
EU
65,7
America
10,8
Asia
9,3
Africa
6,4
Other2
Exportaciones
Europe
60,3
EU
54,4
Asia
20,4
China
8,5
America
10,9
Africa
8,1
Other0,3
Importaciones
External sector (III)
47Source: Círculo de Empresarios based on NSI, 2017
Tourism
Catalonia.
Major international tourist destination
From 1 October, in Catalonia ...
→ ▼ 15% of tourist activity
→ ▼ 20% of reservations for the end of 2017
(Exceltur) (▼1,197 M€ - Q4 2017)
→ Slump in investments
Spanish tourist sector growth will also suffer the
impact and will decrease from 4,1% to 3,1% in
2017.
Catalonia
24,0
Balearic I.
17,9
Canary I.
16,2
Andalusia
14,0
Valencia
11,0
Madrid
7,7
Other
9,2
International arrivals, January - August 2017
% of total weight
Interest rates and risk premium
48Source: Círculo de Empresarios based on Bank of Spain and National Central Banks, 2017
▲ risk premium (120 bp) due to secessionism in Catalonia
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
-0,5
0,5
1,5
2,5
3,5
4,5
5,5
6,5
7,5
27-Oct-08 27-Oct-09 27-Oct-10 27-Oct-11 27-Oct-12 27-Oct-13 27-Oct-14 27-Oct-15 27-Oct-16 27-Oct-17
Ten years bond yield, Spain and Germany(%)
Risk premium (bp)
Spain Germany Risk premium (right)
▲ after Referendum Law (Sep. 6th),illegal Referendum (Oct. 1st), DUI and art. 155 in Catalonia
Companies in Catalonia
49Source: Círculo de Empresarios based on Colegio de Registradores, 2017
Catalonias´s ability to create new
business with regard to all of Spain,
has fallen by more than 10 pp from its
peak level in 2016
After October 1st, more
than 1,800 companies have
moved their headquarters
due to the political
instability in Catalonia (85%
of its market capitalization).
The top 46
companies that have
moved their
headquarters outside
Catalonia = 36.5% of
its regional GDP
15
17
19
21
23
25
27
29
700
900
1.100
1.300
1.500
1.700
1.900
2.100
2.300
Companies constituted in Catalonia
Constituted (left axis) % total (right axis)
1 24
212
177
144
8168
105
112
268
117
92
107 102
78
140
0
25
50
75
100
125
150
175
200
225
250
275
03-o
ct
04-o
ct
05-o
ct
06-o
ct
07-o
ct
08-o
ct
09-o
ct
10-o
ct
11-o
ct
12-o
ct
13-o
ct
14-o
ct
15-o
ct
16-o
ct
17-o
ct
18-o
ct
19-o
ct
20-o
ct
21-o
ct
22-o
ct
23-o
ct
24-o
ct
25-o
ct
26-o
ct
27-o
ct
Number of Catalan companies relocated after
October 1st
Spain´s position in international rankings
Iceland
N. Zealand
Portugal
SPAIN
50
The Global Competitiveness Report
2017 - 2018 (137 countries)
Source: WEF, Sept. 2017
▼2(VS. 2016)
Switzerland
Sweden
Netherlands
SPAIN
1
2
3
40
BlackRock Sovereign Risk Index Sep.
2017 (60 countries)
Source: BlackRock, 2017
1
2
3
23
2017 Global Peace Index(163 countries)
Source: Institute for Economics and Peace, 2017
▲2(vs. 2016)
USA
Singapore
Sweden
SPAIN
1
2
3
17
2017 Global Connectivity Index(50 countries)
Source: Huawei, 2017
▲2(vs. 2016)
Singapore
USA
Malasya
SPAIN
1
2
3
44
Global Human Capital Index 2017(130 countries)
Source: WEF, 2017
Switzerland
USA
Singapore
SPAIN
1
2
3
34
Sweden
Australia
UK
SPAIN
1
2
3
6
Global Youth Wellbeing Index 2017
(29 countries)
Source: International Youth Foundation, 2017
▲2(vs. 2014)
▼3(vs. Jun. 2017)
▲1(vs. 2016)
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