ESPA SPAIN GDP, consumption and investment 2014 ended with a growth in GDP of 1.4% and an increase of 2% year-on-year in the fourth quarter. The acceleration is based on the recovery in consumption and invest-ment.

Private consumption grew 0.9% in the fourth quarter, reaching a year-on-year growth of 3.1%. By contrast, public spend-ing, with nine straight months of decline, dropped by 1% in the last quarter of the year.

Total investment increased 1.4% between October and December, in the following ways:

• Investment in capital goods: 1.9% (10.3% year-on-year).

• Investment in construction: 1.4%, for three consecutive periods of growth.

Spanish R&D The most recent report from the Cotec Foundation about the Spanish research and development sector in 2013 reveals a drop of total investment in R&D, both public (-5.7%) and private (-1.5%). For the first time, private financing of R&D is greater than that in the public sector.

Between 2008 and 2013, the accumulated reduction was:

With regard to R&D spending, it dropped 2.8% (by -3% in the public sector and -2.7% in the companies), finishing at 1.24% of GDP, below the European target of 2% for 2020.

EUROZONE France improves consumption For 2015, France’s INSEE (National Insti-tute of Statistics and Economic Studies) predicts a growth in GDP for the Eurozone of 1%, with an increase of 0.3% in each of the first two quarters to achieve 0.7% by mid-year.

This improvement will come from a drop in the price of petroleum and lower taxes, which is stimulating consumption and economic activity throughout Europe.

In addition, the INSEE points to the posi-tive measures of the France’s Pact of Re-sponsibility, outstanding among which are the tax benefits to increase hiring, which could create 80,000 jobs in a year while also improving company profits and investment.

Use of Greek rescue funds

According to data from Yiannis Mouzakis (of the Macrópolis think tank), 51% of the funds that Greece has received from the

-11,5

-17,1

-8,7

14,3

-20-16-12

-8-4048

1216

TOTAL Public Private Foreign

Development of financing for R&D during the crisisVariation in % 2008-2013

Source: COTEC

31,9%

18,9% 18,0%15,9%

10,6%

3,8%0,9%

Use of Greek rescue funds% of the total = 254,900 million euros

Repa

ymen

t of d

ebt

Cap

italiz

atio

n of

ban

ks

Buyi

ng d

ebt

Inte

rest

pay

men

ts

Gov

ernm

ent

spen

ding

IMFpayments ESM capital

Source: Macropolis

Así está…

The economy March 2015

1 www.circulodeempresarios.org

Eurozone and the IMF will go to paying back national debt:

• 31.9% (81,300 million) at expiration of notes and bonds;

• 15.9% (40,600) to interest;

• 3.8% (9,600) to paying the IMF.

Likewise, 18.9% (48,200) was used to re-capitalize financial institutions, 18% for the purchase of debt (45,900) and 10.6% (27,000) for the operational needs of Greece.

INTERNATIONAL Global debt According to the McKinsey Global Insti-tute report Debt and (not much) deleveraging (February 2015), between the start of the economic crisis in 2007 and 2014, global debt (of the 47 countries analyzed) has grown by 40%, 57 billion dollars (17 points of the GDP), principally in the advanced countries and because of the public sector.

Ireland (+172 p.p.), Singapore (+129 p.p.), Greece (+103 p.p.), Portugal (+100 p.p.), China (+83 p.p.) and Spain (+72 p.p.) are the countries where the total debt (not counting the financial sector) has grown the most.

In the case of China, its debt quadrupled between 2007 and 2014 (from 7.4 bn $ to 28.2 bn $), fundamentally in the real estate sector (50% of the loans) and in shadow banking (50% of the new loans). While this level of debt is not among the highest, it is, at 282% of the GDP (including financial institutions), above that in Germany (258% of the GDP) and the USA (269% GDP).

Japan The Japanese economy is growing again following the increase of the VAT in April of 2014 (from 5% to 8%), a move aimed at reducing public debt (from 230% of GDP at the end of 2013) and guaranteeing the con-tinued financing of social security. Prelimi-nary data from the government indicates an advance in GDP in the fourth quarter of 2014 of 0.6% quarter-on-quarter and of 2.2% year-on-year, with the result that the country’s economy is coming out of its fourth recession in the last six years.

This upturn is largely explained by an in-crease in exports (2.7% quarter-on-quarter), which have been favored by the weakness of the yen and by greater demand from overseas, especially the US and the rest of Asia.

By contrast, domestic consumption, which accounts for 60% of the economy, only in-creased by 0.3%. Public investment grew 0.6% and private investment by 0.1%.

2037 45

22

33

58

26

38

56

19

33

40

4T2000 4T2007 2T2014

Global debtBn $

Families

Non-financial companies

Public sector

Financial sector

87

142

199

Source: McKinsey Global Institute

400390382

327325317313302

290259

JapanIreland

SingaporeBelgium

NetherlandsGreece

SpainDenmarkSweden

Italy

Debt. Top 10 advanced and developing economies % GDP, excluding financial sector

Economías avanzadas

Source: McKinsey, 2015

225222217

187178

136134133128128

HungaryMalaysia

China Thailand

IsraelChile

PolandSouth AfricaCzech Rep.

Brazil

Developing economies

‘Así está…The economy’, a publication of the Círculo de Empresarios produced by its Department of the Economy, contains infor-mation and opinion from reliable sources. However the Círculo de Empresarios does not guarantee its accuracy and does not take responsibility for any errors or omissions. This document is merely informative. As a result, the Círculo de Empresarios is not responsible for any uses that may be made of the publication. The opinions and estimates of the Department can be modified with-out any warning.

www.circulodeempresarios.org