catalan economy

The “very moderate” growth expectations for 2014, between 0.5% and 1%, will make it “difficult” for the unemployment rates to fall below the current 27%. This was the conclusion of the 2014 Economic Report of Barcelona-based ESADE, one of the top business schools in the world. The main author of the report stressed that this “slow and costly” growth should contribute only in a “very reduced” way to creating new jobs in 2014. However, he also explained that the Labour Market Reform would have positive effects on employment levels in the medium and long term. The study indicates that consumption in 2014 will “remain restricted” due to the high unemployment rates and reduced wages.

The Catalan Government has welcomed the 138 proposals issued by a council of business associations, trade unions, academic experts and leading professionals, who form the so-called ‘Agreement for the Industry’ platform. The President of the Catalan Executive, Artur Mas, stated that those proposals are “a possible seed” for a broader agreement: a National Pact for the Industry that will define the priorities and main guidelines of Catalonia’s industrial policy for the next decade. The Catalan Minister for Business and Employment said that the 138 proposals coincide with “between 70 and 80%” of the Executive’s industrial policies. However he pointed out that the Government couldn’t bring all of them on board for budget or jurisdiction limitations.

The Catalan Government will file several formal demands for payment of the €2.02 billion the Spanish Government legally owes Catalonia from the 2008-2013 period. The money represents 1% of Catalonia’s GDP or 7% of the Catalan Government’s budget. According to the Statute of Autonomy, which was approved by the Spanish Parliament and came into force in 2006, the Spanish Government was obliged to invest a percentage equal to or higher than Catalonia’s share of Spain’s GDP between 2007 and 2013 in order to compensate for an historical lack of infrastructure investment. If it was not doing so, the Spanish Executive had to compensate Catalonia financially. The measure was adopted after exhaustive negotiations and was essential to the approval of this law by the Catalan people through a binding referendum. However, the Spanish Government never honoured it. Madrid compensated Catalonia for the lack of investment in 2007, but not for the remaining years.

The President of the Catalan Government, Artur Mas, insisted this Tuesday he will organise a self-determination vote within the legal framework on the date agreed upon by four political groups 3 weeks ago. In a press conference following the first Cabinet Meeting of 2014, Mas ruled out the possibility of making changes in the government he chairs on the short-term, after speculations that the Catalan Left-Wing Independence Party (ERC) could sit in the Cabinet, formed by members from the Centre-Right Catalan Nationalist Coalition (CiU) and independents. In addition, he identified “a cross slope” in the economic, social and political context, referring to a slight recovery, after 6 “terrible and fearsome years”.

For the first time since the beginning of the crisis, sales have already shown a “slight recovery” during Christmas, highlighted the President of Catalonia’s Confederation of Commerce (CCC), Miguel Ángel Fraile, who is “very optimistic” about the upcoming winter sales. Indeed, during the months of November and December, retail consumption have registered an increase of 2% and 3% compared to the previous year. It is expected that Catalans will spend a total of about €800 million during the winter sales, between 3% and 5% more than last year. These estimates by CCC also indicate that, on average, each citizen will spend €90 for the purchase of clothing items.

The Catalan Government deficit amounted to 1.6% of the GDP between January and October, and consequently missed the 1.58% target imposed by the Spanish Government. Madrid was also not able to comply with the limit set for the central government, and had a deficit of 3.96% in November, higher than the 3.8% required for the whole year. The Spanish autonomous communities’ total deficit amounted to 1.12% of the GDP in October, which was in line with the yearly objectives, according to the Spanish Government. When considering the deficit of the autonomous communities, the Spanish state and the Social Security, it amounted to 4.87% of the GDP. The payments of the banking bail-out will also be included in this figure at the end of the year. Brussels had set a global limit of 6.5% for Spain in 2013.

Catalonia has confirmed its fourth place in the Autonomous Community rankings of GDP per capita, according to figures released by the Spanish Institute of Statistics (INE). This data from 2012 reveals that the Basque Country is still the leading area in Spain, followed by the region of Madrid and Navarre. The figures indicate that the GDP per capita of Catalonia amounted to €26,412 in 2012, meaning 0.7 % less than in 2011. In 2012, the wealth generated by the Catalans totalled €192,535 million, 18.7 % of the Spanish GDP, above the 2011 figures when Catalonia contributed to 18.6 % of the Spanish economy.

In the first eleven months of 2013, Catalonia has been the favourite destination in Spain for international visitors. Indeed, 14,838,018 foreign tourists have travelled to Catalonia during this period, meaning 25.8 % of the total number of international visitors in Spain. This represents an increase of 7.4% over the same period in 2012. In November, Catalonia has welcomed 836,654 foreign tourists and has only been surpassed by the Canary Islands (1,073,759). Stays in hotels have also registered an upward trend: they have increased by 8.6% at Spanish level this month and by 4.1% in Catalonia. The majority of these foreign tourists come from France, the UK, and Germany while the number of visitors from Russia and Belgium has also increased significantly.

The Catalan Government’s Advisory Council for the National Transition (CATN), formed of renowned independent experts, emphasised that Catalonia’s independence from Spain would not represent breaking their affective and historical bounds. Furthermore, they insisted on the need to continue and even to increase cooperation “based on a new principle of equality and mutual respect between both parties”. They have suggested different ways to cooperate, through different structures. For instance, they proposed the creation of the ‘Iberian Council’ bringing together Catalonia and Spain, as well as Portugal and Andorra if they wished to, which would mirror the Nordic Council or the Benelux. Furthermore, the CATN issued three other reports, including a detailed analysis of Catalonia’s tax agency.

Catalan pharmaceutical company Almirall has announced on Tuesday it will buy Aqua Pharmaceuticals, an American company specialised in dermatological treatments. The $328 million transaction reflects the Catalan multinational’s strategy to diversify its activities, by establishing itself in a sector that will be a “key platform for growth”. Aqua Pharmaceuticals has a portfolio of well known brands for treating acne and skin rashes. This year the total sales of the American company’s products are expected to generate $127 million. According to a statement to the National Securities Market Commission (CNMV), Almirall intends to continue employing the same Aqua management team, to benefit from their experience in the U.S. market.

Juan Rosell, the current Chairman of Spain’s main association of employers (CEOE), and who used to chair the main Catalan employers association, stated that Catalan businesspeople are shifting towards pro-self-determination stands. Rosell, who is openly against Catalonia’s independence, stated that “business people are not aliens” and “if society has changed its views in the last few years, so have businesspeople”. The top representative of Spanish business-owners stated that the current moment is “extremely serious”. Rosell demanded to “bridge the gap, put all the economic data on the table and analyse the pros and cons for one side and the other one” regarding Catalonia’s independence from Spain. Rosell asserted that companies have not left Catalonia due to the self-determination process.

Housing prices increased by 0.8% in Catalonia during the third quarter of 2013, which is the first quarterly increase in the last three years. However, despite the positive figures, in annual terms prices at the end of September were 8.1% lower than those registered 12 months ago, due to the price falls registered in the second half of 2012 and the first 6 months of 2013. Between July and September 2013, prices of newly-built flats and houses in Catalonia rose by 5.7%, while those of second-hand housing were still decreasing (-0.3%). However, overall figures suggest that the real estate market may have reached the bottom and that its recovery might be about to start. In the whole of Spain, housing prices rose by 0.7% in the third quarter of 2013.

Next February, the Mobile World Congress (MWC), the world’s most important event in the mobile industry, will open its doors in Barcelona for the 9^th consecutive year. The major companies in the sector will introduce new products or give conferences on applications designed for many innovative uses. By hosting the fair each year at least until 2018, Barcelona, named Mobile World Capital, is looking to become an international leader in this industry. The city has also created a HUB to develop the sector even further. The 2014 edition of the fair expects to break all records. The Director of the MWC, John Hoffman, stated that 75,000 visitors were expected, meaning 3,000 more than last year. Besides, once the fair will be over, it is estimated the local economy could have gained €340 million from it.

Catalan entrepreneurs and businesspeople are coming back home from India after making hundreds of contacts and discussing potential business opportunities that might help the Catalan economy to recover even faster. Motor, biofarma and IT enterprises have completed a very successful Asian tour and expect to open business on the continent within the next few months.

Speaking to the Economic Affairs Committee of the European Parliament, the European Commissioner for Employment, Lázló Andor, said that Spain should profit from its decentralised organisation to help fight youth unemployment. He suggested that the rest of Spain’s Autonomous Communities should follow the examples of Catalonia and Navarra to improve employment levels among youngsters. The European Commissioner said that Spanish authorities should take note of the plans launched by Catalonia and Navarra, where the youth unemployment situation “is better than the national average”. However, despite these levels being lower than in most of Spain, youth unemployment in Catalonia is worryingly high, at more than 53% in July.