Quarterly report on the global and the

Spanish economy Q1 2016

Círculo de Empresarios Madrid, April 2016

2

ENTORNO GLOBAL

2016 GDP projections

3 Source: Círculo de Empresarios based on IMF, April 2016

2.4%

EMU

1.5%

-3.8%

2.4%

US

-1% 0.6%

0.5%

6.5% China

India

7,5%

4.9%

Russ

ia

-1.8%

1.9%

Nig

eria

2.3%

Global GDP

2015 2016

3.2 3.4

Obstacles to growth

4

1

2

3

4

5

China’s economic development

Emerging economies adjustment, mainly of low-income commodity exporters

European political and social scene: Brexit, refugee crisis…

Global geopolitical risks

Financial markets volatility

Slower economic growth

5

Growth is expected to continue at a moderate pace Gradual recovery in advanced economies and uncertainty in emerging markets Slowdown in China and robust growth in India

-4

-2

0

2

4

6

8

10

2013 2014 2015 2016* 2017*

Real GDP growth rate in BRICS%

China India Brazil Russia South Africa

Source: Círculo de Empresarios based on IMF, April 2016

3,3 3,4 3,1

4,14,6

0

1

2

3

4

5

6

2013 2014 2015 2016* 2017*

Real GDP growth%

Emerging Advanced Global

* ProjectionSource: Círculo de Empresarios based on IMF, April 2016

Global trade slowdown

During 2015, global trade growth has slowed notably relative to GDP growth

Source: IMF, April 2016

Trade and Output growth Annual change

The slowdown has been more pronounced in emerging markets

-2

-1

0

1

2

3

World trade (goods)Quarterly change, % Volume trade World trade average1997-2007

Source: Círculo de Empresarios based on ECB, 2016

0

2

4

6

8

1980-2012 2013-15 1980-2012 2013-15

Advanced Emerging

Volume trade Real GDP

6

Weakness in global economic activity

* Indicator that provides an advance signal of waht is happening in the private sector (output, new orders, employment...)

Indicators such as PMI or industrial production showed a decline in economic activity

Below 50 signals an economic activity deterioration

Probability of recession

Source: IMF, April 2016

0

0,2

0,4

0,6

0,8

1

1,2

2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4

Industrial productionQuarterly change

Source: Círculo de Empresarios based on CPB, 2016

0%

10%

20%

30%

40%

50%

60%

70%

US Eurozone Japan Emerging Asia Latin America Rest of the world

Probability of recession Previous projection

46

48

50

52

54

56

58

60

2014 2015 Q1 2015 Q2 2015 Q3 2015 Q4 Jan.16 Feb.16

PMI composite*

Global US uk

Source: Markit, 2016

7

Emerging: Asia leads global growth

8

-0.47%

-0.11%

Emerging Asia: • GDP growth-(5,7% vs 5,9%)

• In 2015, 30% of global GDP and 60% of annual GDP growth

• The most important contribution to the region came from India and Southeast Asia

46,1 47,2 48,4 49,8 51,1 52,7 53,7 54,7 55,6 56,5 57,1 57,6 58,1 58,7

0

10

20

30

40

50

60

70

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

GDP share of emerging marketsBased on purchasing -power-parity (PPP)

Emerging Asia Latin America Total emerging GDP share

Emerging economies: 57,6%Advanced economies: 42,42%

Source: Círculo de Empresarios based on IMF, 2016

-1

-0,8

-0,6

-0,4

-0,2

0

On impact 1 year 2 years

Emerging excluding BRICS

Global

Impact of a 1 percentage point decline in BRICS on growth

Source: World Bank, 2016

China’s transition to a new growth model

9

Source: Círculo de Empresarios based on IMF, 2016

6.9 6.5

1,8

2015 2016

3,1

Real GDP Annual change, %

Slowdown in aggregate economic activity

Robust growth in the services sector (90% of GDP growth)

Source: Círculo de Empresarios based on Reuters, 2016

Slightly stronger exports in March External sector Annual change

2017

6.2 50.5 40.5 9

Services Industry Primary

GDP by sectors %

6.9

Construction

Impact of a 1 percentage point decline in China’s growth other emerging economies growth

Source: Círculo de Empresarios based on World Bank, 2016

Source: Círculo de Empresarios based on KPMG, 2016

-30

-25

-20

-15

-10

-5

0

5

10

15

2014 1Q-2015 2Q-2015 Jul.15 Aug.15 Sep.15 Oct.15 Nov.15 Dic.15 Jan.16 Feb.16 Mar.16

Exports Imports

-1,2

-1

-0,8

-0,6

-0,4

-0,2

0Commodities exporters Commodites importers

China: foreign reserves and exchange rate

Source: Círculo de Empresarios based on SAFE, 2016 * Projection

China’s foreign reserves declined in order to stabilize the yuan

10

Source: Círculo de Empresarios based on Investing and Reuters ,2016

3,0

3,2

3,4

3,6

3,8

4,0

4,2

may

.-14

jun.

-14

jul.-

14

ago.

-14

sep.

-14

oct.-

14

nov.

-14

dic.

-14

ene.

-15

feb.

-15

mar

.-15

abr.-

15

may

.-15

jun.

-15

jul.-

15

ago.

-15

sep.

-15

oct.-

15

nov.

-15

dic.

-15

ene.

-16

feb.

-16

mar

.-16

Currency reserves Trillion $

Yuan exchange rate

-770 billion $ since May-14

2015 2016

In 2016, the chinese yuan remained broadly stable

37 % of GDP

28 % of GDP*

6,1

6,3

6,5

6,7

6,9

7,1

7,3

7,5

7,7

Yuan-dollar Yuan- euro

China: financial system

11 * In February 2016, policy makers injected 340 billion yuan in the financial system Source: Círculo de Empresarios based on Bloomberg, Investing and Reuters, 2016

China equity markets

The second largest equity market in the world moderate its bearish bets although recent cash injections*

1Q 2016: Shanghai Composite: -9%

Hang Seng: -3%

2.000

2.500

3.000

3.500

4.000

4.500

5.000

5.500

17.000

19.000

21.000

23.000

25.000

27.000

29.000

31.000

Hang Seng (left axis)

Shanghai Composite (right axis)

India: resilience to resist global growth

12 Source: Círculo de Empresarios based on World Bank, Bloomberg and KPMG, 2016

GDP 2016 projections % 7,3 7,8 7,9

2015 2016 2017 Growth in India remained strong Economic growth was mostly driven by domestic demand

5% 7,1%

Unemployment rate

Share of global GDP Primary: 16%

Secondary: 23% Tertiary: 61%

GDP by sectors

7,1%

Inflation rate

7,8

6,7 6,7

5,8 5,5 5,34,6

3,9 3,9 3,8 3,5 3,3 3

Japan: 2016 projections

13

1,8

* Japan external debt accounts 10% of total government debt **In global terms, 5.5 trillion $ in government bonds have negative yields, covering 23% of global GDP Source: Círculo de Empresarios based on IMF and Bloomberg, 2016

In January, the Bank of Japan introduced negative interest rates** in order to stimulate the domestic demand

Far away from its 2% target and facing deflationary pressures from China

GDP + 0,5%

Interest rate - 0,1%

Inflation -0,2%

Unemployment 3,3%

Public debt* 250%

Growth in Japan fell to 0.6% in 2015 + 80 pp since 2007

Lowest level since 1995

Latin America: growth heterogeneity

* Forecast * *Chile, Colombia, Peru and Mexico

Pacific Alliance countries are expected to keep growth in the region against Mercosur countries Higher macroeconomic imbalances

*

Venezuela 2015: -8% 2014: -5,7% Source: IMF, April 2016

$ appreciation

Income losses

Weaker exports

Inflation

Venezuela 2015: 121,7% 2014: 481,5 Source: IMF, April 2016

0,9

-0,5-0,9

-6

-4

-2

0

2

4

6

ARG BRA CHI COL PER MEX Mercosur Pacific Alliance

Latin America

Real GDP growthAnnual change

2014 2015 2016

Source: Círculo de Empresarios based on BBVA Research, 2016

0

10

20

30

40

ARG BRA CHI COL MEX PER

InflationAnnual change

2015 2016

Source: BBVA Research, 2016

*

*

*

* Forecast

14

Downturn in Brazil has intesified

Source: Círculo de Empresarios based on BBVA Research and World Bank, 2016

Source: Círculo de Empresarios based on Investing, 2016

Output contraction mostly driven by private consumption and investment Political tensions and a low approval government rating (10%)

Inflation rate towards the 4,5% target

GDP and components %

2/3 of GDP

6,4

10,7

6,8

0

2

4

6

8

10

12

2014 2015 2016

Since April 2015, depreciation higher than 12%

% Equity markets

Inflation rate

-15

-10

-5

0

5

10

GDP Investment Private consumption Exports Imports

2015 2016 2017

70

90

110

130

150

170

190

01.01.2014 23.04.2014 13.08.2014 03.12.2014 25.03.2015 15.07.2015 04.11.2015 24.02.2016

Exchange rate (USD-BRL) 10 years yield

* *

* Forecast

15

US: economic growth and labour market

16

Moderate growth in 4Q-15 (1.4%) against a 2.2% average in the first three quarters of the year Dollar appreciation reduced the external sector contribution to economic growth Job growth remained dynamic while labour force participation improved over the past few months

GDP and components %

Recession probabilities intensified in a 25% for the next 12 months

Labor market

Source: Círculo de Empresarios basesd on BLS, St Louis Fed, 2016

Source: Círculo de Empresarios based on BEA, 2016

Long term unemployment: 27,6%

Thousands

%

-0,9

4,6 4,3

2,1

0,6

3,92

1,4

-4

-2

0

2

4

6

8

10

12

14

1Q-2014 2Q-2014 3Q-2014 4Q-2014 1Q-2015 2Q-2015 3Q-2015 4Q-2015

Private consumption Investment GDP

5,7

5,5 5,55,4

5,5

5,3 5,3

5,1 5,15,0 5,0 5,0

4,9 4,95,0

4,2

4,4

4,6

4,8

5,0

5,2

5,4

5,6

5,8

0

100

200

300

400

Job growth (left axis)

Unemployment rate (right axis)

Natural rate of unemployment (NAIRU)

US: FED monetary policy

The Federal Open Market Committee (FOMC) revised its policy path to 2 rate hikes in 2016

Positive indicators • Labour market • Inflation • Oil stability

Negative indicators • Uncertainty about US growth • Global growth outlook • Financial markets volatility

Committee members divided on Fed’s rate hike calendar

Interest rate hike survey, April 2016

April June September December

0 %

53,7 %

19,6 %

40,2%

Source: Bloomberg, April 2016

* In order to conclude the year in the interval [0,75%-1%]

*

Future interest rate hikes will depend on...

17

Heterogeneous growth in Europe

7.8 4.1 3.2 2.3 1.7 1.2 0.8

Real GDP growth %

Ireland

Sweden

Spain

UK France

Germany

Italy

Government debt % 99.4% 43.2% 99.2% 88.6% 72% 97% 135%

Source: Círculo de Empresarios based on Eurostat and European Commission, 2016

18

Eurozone: macroeconomic indicators

19

Economic recovery supported by domestic demand 1Q 2016: signals of activity moderation due to euro recent appreciation, weaker economic sentiment, emerging markets... Decline in energy prices further dampen inflationary pressures Unemployment rate trended gradually downwards (16.63 million unemployed)

Real GDP and inflation rate %

Unemployment rate by countries %

Eurozone rate of unemployment %

European Commission Forecast

0,5

-4,5

2,11,6

-0,9-0,3

0,91,6 1,7

3,3

0,3

1,6

2,7 2,5

1,3

0,4 0 0,5

2008 2009 2010 2011 2012 2013 2014 2015 2016

GDP Inflation rate

0

5

10

15

20

25

30

Source: Círculo de Empresarios based on Eurostat and European Commission, 2016

11,6

11,211

10,710,5 10,4 10,3

2014 Q1-2015 Q2-2015 Q3-2015 Q4-2015 jan.16 feb.16

Euro area: monetary policy revision

20

Monetary policy

Interest cut rate

Deposit facility cut rate

Expand the asset purchase

program

Include investment

grade bonds issued by non

financial companies

+ 4 TLTRO*

ECB’s March new measures

ECB cut its main interest rate to 0% Deposit facility rate cut by 10 bps to -0,40% (-0,30 prev.)

Monthly expansion of the asset purchase program to 80 billion € (60 billion € prev.)

Bonds issued by non financial companies will be included in the list of assets that are eligible for regular purchases

Source: Círculo de Empresarios based on ECB, 2016 * Refinancing operations with a maturity of 4 years

Oil prices

Since March-15 oil prices dropped by more than a 20% Persistent oversupply and weaking oil demand

Iran will increase production to regain market share:

+ 2 mbd

Doha meeting: (17 Apr) : Plan to prop up oil prices

0

20

40

60

80

100

120

2013 2014 Q1-2015 Q2-2015 Q3-2015 Q4-2015 Jan.16 Feb.16 Mar.16

Brent and West Texas Intermediate (WTI)$/bbl

Brent WTI

Source: Círculo de Empresarios based on IMF, 2016

90

91

92

93

94

95

96

97

98

Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016

Supply and demand of petroleum and other liquidsMillion barrels per day

Supply Demand

Source: Círculo de Empresarios based on EIA, 2016

21

US oil production US production Mbd

6%

80%

14%

Crude Oil Production (Contribution to total net increase, 2011-2015) US oil and gas investment % GDP

2004 2014

0.4%

2.1%

+2.8 Tn $

Slightly lower oil production due to falling oil prices

2011- Apr.15 +70%

Signs of a slowdown in shale oil production (4.84 million in May*)

4

5

6

7

8

9

10

US

OPEP Russia

Source: Círculo de Empresarios based on BBVA Research, 2016 Source: Círculo de Empresarios based on BBVA Research, 2016

Source: Círculo de Empresarios based on EIA, 2016

* Forecast

22

Commodity prices

23

Nonfuel commodity prices appear to have stabilized

Impact of commodity prices in global growth Percentage points

30

50

70

90

110

130

150

2012 2013 2014 2015 2016

Commodity prices evolution2010=100

Energy Non fuel commodities

Source: Círculo de Empresarios based on World Bank, 2016

-60 -50 -40 -30 -20 -10 0 10 20 30 40

Brent

Natural Gas

Copper

Aluminium

Iron

Nickel

Corn

Commodity prices

2016

2015

*

SOurce: Círculo de Empresarios based on Bloomberg, 2016

-2,5

-2

-1,5

-1

-0,5

0

Japan Eurozone US Colombia Peru China Brazil Russia

* Year to date change Source: Círculo de Empresarios based on World Bank, 2016

Energy sector perfomance

24

Higher likelihood of increasing bankruptcies (42 in US in 2015) if there are further declines in commodity prices

US energy and commodity related sectors represent 17% of the US high yield market

1Q- 2016: Moderate recovery

*Goldman Sachs Commodity Index: Benchmark which measures commodity prices performance SOurcee: Círculo de Empresarios based on S&P, Fitch and Reuters, 2016

*

50

60

70

80

90

100

110

120

Energy sector in the financial markets6 April 2015=100

S&p 500 Energy GSCI

Currency markets

25

Recent depreciation of the dollar

Euro appreciation was driven by a moderate pace of further funds rate in US

Change in exchange rates YTD BREXIT

RISK

Source: Círculo de Empresarios based on Investing y Bloomberg, 2016

Euro exchange rate to dollar and british pound

%

-30 -10 10 30 50 70

Venezuelan bolivar

Argentine peso

Pound

Mexican peso

Chinese yuan

Swiss franc

Euro

Canadian dollar

Russian ruble

Brazilian real

Japanese yen

0,62

0,64

0,66

0,68

0,7

0,72

0,74

0,76

0,78

0,8

0,82

0,95

1

1,05

1,1

1,15

1,2

1,25

Pound (right axis) Dollar (left axis)

Equity markets

26

Equity markets %

Source: Círculo de empresarios based on Investing and Bloomberg, 2016

In early 2016, losses in equity markets specially for the banking sector

Equity markets January 2015=100

Between December and January, Euro Stoxx banks lost 35% of its capitalization

60

70

80

90

100

110

120

130

02.01.2015 13.03.2015 26.05.2015 04.08.2015 13.10.2015 22.12.2015 03.03.2016

Eurostoxx 50 Ibex 35 S&P 500

-20 -15 -10 -5 0 5 10 15 20

Bovespa (Brazil)

Dow Jones (US)

S&P 500 (US)

FTSE 100 (UK)

Nasdaq (US)

CAC 40 (France)

PSI (Portugal)

Dax (Germany)

Ibex 35

Nikkei (Japan)

Shangai Comp. (China)

27

ENTORNO GLOBAL

Boosts to growth

28

1

2 3

4

5

Oil prices

Financial costs

Expansionary effects of economic policies

Improvement in the labour market

Exports to European markets

Forecasts: recovery continues…

29

2016* 2017*

2.7%

2.3%

*Forecasts Source: Bank of Spain, March 2016 IMF, April 2016: GDP growth = 2.6% in 2016

… but at a moderate pace

3.2%

2015

Growth in 2016

30

January 2016: Trend change

The Economic Sentiment Indicator (European Commission) has fallen since January

60

70

80

90

100

110

120

2007

M03

2007

M07

2007

M11

2008

M03

2008

M07

2008

M11

2009

M03

2009

M07

2009

M11

2010

M03

2010

M07

2010

M11

2011

M03

2011

M07

2011

M11

2012

M03

2012

M07

2012

M11

2013

M03

2013

M07

2013

M11

2014

M03

2014

M07

2014

M11

2015

M03

2015

M07

2015

M11

2016

M03

Economic Sentiment Indicator, March 2016 EU-28

Eurozone

Spain

Source: European Commission , 2016

Forecasts 2016: composition of growth

31

GDP annual growth in 2016 = 2.7%

• Private consumption = 2,9%

• Public consumption = 1%

• GFCF = 5%

• Exports = 4.4%

• Imports = 5.3%

Domestic demand

0.2 pp 2.9 pp

External demand

contribution to growth

contribution to growth

Source: Círculo de Empresarios based on Bank of Spain, 2016

GDP growth

32

Despite domestic and global uncertainties, Spain overtakes the eurozone and

the OECD growth

Forecast 1Q 2016 0.7% quarterly change

-6

-4

-2

0

2

4

6

2006 Q4 2007 Q4 2008Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4

GDP growth%, annual change Eurozone

OECD

Spain

Source: Círculo de Empresarios based on OECD 2016

-9

-8

-7

-6

-5

-4

-3

-2

-1

0

1

2

Feb

-10

Jul-1

0

Dec

-10

Ma

y-11

Oct

-11

Ma

r-12

Aug

-12

Jan-

13

Jun-

13

No

v-13

Ap

r-14

Sep

-14

Feb

-15

Jul-1

5

Dec

-15

Credit to non-financial corporationsInterannual change

Source: Bank of Spain, 2016

33

Credit to households and corporations 2015

Access to credit improves for households and non-financial corporations, but it is still below the end of 2010 levels

-8

-7

-6

-5

-4

-3

-2

-1

0

1

2

3

Feb

-10

Jul-1

0

Dec

-10

Ma

y-11

Oct

-11

Ma

r-12

Aug

-12

Jan-

13

Jun-

13

No

v-13

Ap

r-14

Sep

-14

Feb

-15

Jul-1

5

Dec

-15

Credit to householdsInterannual change

Other loans

Total

Housing loans

Source: Bank of Spain, 2016

%, annual change

%, annual change

34

Labour market

March 2016: ▼ Unemployed= 58,216 vs. February

▲ Affiliates = 138,086 vs. February

▲ Registered contracts = 1,508,881

• 10% permanent • 90% temporary

Total dependent employment:

• 75% permanent • 25% temporary

Unemployment rate in Spain, February 2016= 20.4% of working population vs.

eurozone average = 10.3% (Eurostat).

16,393,866

17,305,798

4,763,680

4,094,770

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

Jan.

16

Feb.

16

Mar

. 16

Affi

liate

s

Evolution of affiliation to Social Security and registered unemploymentPersons

Affiliates Unempployed

Unemployed

Source: Círculo de Empresarios based on Ministryof Employment and Social Security, March 2016

1,11,00,90,9

-0,8-0,8

-0,3

0,0

-0,3

-0,7

-0,9

-0,4

0,10,1

-0,2

-0,6-0,7

-1,1-1,3

-1,0

-0,4

-0,1-0,2

-0,5-0,3

0,10,2

0,4

-0,10,0

0,2

-1,5

-1

-0,5

0

0,5

1

1,5

CPI%, interannual change Core inflation

General

Source: INE, 2016

35

Prices

1Q 2016 → CPI has ventured further into negative territory and core inflation has kept

its positive trend

Incompliance of the deficit target

36

In 2015, the public deficit exceeded by 0.8 pp the Stability Pact target of -4.2% …

… due to the incompliance of 14 regions and the deficit in Social Security

-2,7 -2,64 -2,52 -2,51

-2,13

-1,67-1,53 -1,52 -1,38 -1,36 -1,33 -1,28

-1,13 -1,13-0,69 -0,57 -0,54

Ca

talo

nia

Extre

med

ura

Mur

cia

Va

lenc

ian

C.

Ara

go

n

Ca

stile

-La

Ma

ncha

Ast

uria

s

Bale

aric

. Isla

nds

Ca

nta

bria

Ma

drid

Ca

stile

and

Leo

n

Na

varra

And

alu

sia

La R

ioja

Basq

ue. C

Ga

licia

Ca

nary

Isla

nds

Deficit, 2015% GDP

Source: Ministry Treasury and Public Administrations, 2016

TARGET

-0.7%

Balance by administration, 2015% GDP

2014 2015 Objetivo 2015 ▲2015/Target 2015

Central -3.67 -2.53 -2.9 0.37Autonomous Communities -1.75 -1.66 -0.7 -0.96Local Corporations 0.57 0.44 0 0.44Social Security -1.04 -1.26 -0.66 -0.6Total - including bank aid -5.89 -5.24Total -5.79 -5 -4.2 -0.81

Source: Treasury, 2016

Debt: high public debt

37

Source: Círculo de Empresarios based on Bank of Spain, 2016

Since 2007, public debt increased by 180%.

Public and private debt % GDP

Private debt fell by more than 20% since 2009.

EUROZONE Public debt: 94.2% Non-financial corporations debt: 133% Households debt: 61%

35,5 39,4

52,760,1

69,5

85,493,7

99,3 99,2

80,7 81,4 83,4 82,8 81,1

79,775,9 71,9 67

108,8 113 115,5 115,1 111,5105,4

98

90,584,9

20

40

60

80

100

120

140

2007 2008 2009 2010 2011 2012 2013 2014 2015

PPAA Households Non-financial corporations

Debt in regional administrations 2015

38

Galicia 18.6%

Debt, 4Q 2015 % regional GDP

Asturias 18%

Cantabria 22%

Basque C. 14.4%

La Rioja 18%

Navarre 18.2%

Aragon 20.5%

Catalonia 35.2%

Valencian C. 41.3%

Murcia 27.4%

Andalusia 21.6%

Balearic Islands 30.2%

Canary Islands 15.7%

Extremadura 20.3%

Castile and Leon 19.5%

Madrid 13.6%

Castile-La Mancha 35.6%

Source: Círculo de Empresarios based on Bank of Spain data, 2016

> 15%

>10%

> 30%

> 20%

Total 24.2% national GDP 24.4% total debt

Social Security

Source: Círculo de Empresarios based on Ministry of Employment and Social Securuty, 2016

Social Security Reserve: withdrawals Millions € 2015 Total

withdrawals: 13,250 millions €

1.700

1.363

3.530

410

3.500

1.000 1.000720

5.000

428

5.500

500

8.000

1.300

3.750

7.750

1.750

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

2014 Total withdrawals:

15,300 millions €

2013 Total withdrawals:

11,648 millions €

2012 Total withdrawals:

7,003 millions €

Balance: 32.481

millones €

The Social Security Reserve Fund could run out of resources in 2019 if the withdrawals persist. 39

Exports

40

January 2016 (annual change)

▲ 2.1% (18,267.3 M€) Imports

▲ 0.8% (20,653.9 M€) Trade balance

▼ 8.1% in deficit (2,386.6 M€)

▼ 18.9% in energy deficit (68.6% of total)

Geographic distribution (%)

SECTORS: TOP 3

Ex

ports

Im

ports

EU

Rest of Europe 5.1%

69%

EU

Rest of Europe

54.8%

5.9% China

10%

Source: Círculo de Empresarios based on Ministry of Economy and Competitiveness, March 2016

External sector

Exports % / total Imports % / total

Capital assets 18.8 Capital assets 20.7

Automobile 18.0 Chemistry 16.1

Food, beverage and tobacco

17.8 Automobile 13.9 EUROPE60,6

ASIA20,6

AMERICA10

AFRICA8,5

Other0,3

EUROPE74,1

AMERICA9,6

ASIA8,7

AFRICA6,1

Other1,5

Risk premium

41

Markets volatility, mainly in the banking sector, and political uncertainty explain

the risk premium development

0

20

40

60

80

100

120

140

160

180

0

0,5

1

1,5

2

2,5

3

3,5

Ten years bond yield. Spain and Germany (%) Risk premium (bp)

Spain Germany Risk premium

Source: Círculo de Empresarios based on Bank of Spain data, 2016

Spain´s position in international rankings

42

Switzerland

Norway

Sweden

SPAIN

1

2

3

7

Hong Kong

Singapore

N. Zeland

SPAIN

1

2

3

43

Switzerland

Netherlands

Sweden

SPAIN

1

2

3

24

Finland

Iceland

Sweden

SPAIN

1

2

3

6

Denmark

Finland

Sweden

SPAIN

1

2

3

36

The Energy Architecture Performance Index 2016

European Patent Applications Ratio applications to population, 2015

2016 Index of Economic Freedom

2016 Environmental Perfomance Index

Corruption Perception Index 2015

Source: Global Energy Architecture Performance Index Report 2016, WEF, 2016

Source: The Heritage Foundation, 2016

Source: Annual Report 2015, European Patent Office, 2016

Source: Yale University, 2016

Source: Transparency International. 2016

N. Zeland

Sweden

South Africa

SPAIN

1

2

3

27

The Open Budget Index 2015

Source: International Budget Partnership, 2016

www.circulodeempresarios.org