catalan economy

The Institut Català de Finances (ICF), the Catalan Government’s financial institution which offers credit, announced that it gave €1.7 billion in loans to 8,500 companies over the last two years in an Action Plan. The plan’s main objective is to foster economic activity and prevent companies from going bankrupt due to liquidity issues. 98% of those who received loans were SMEs and independent workers. The ICF’s Action Plan had the objective of injecting liquidity into the real economy, into the Catalan business network, while the private banks are going through their restructuring process and access to credit is particularly difficult for many companies.

According to the Spanish Statistics Institute (INE), the Catalan GDP fell by 1% last year. However, according to the Catalan Statistics Institute (Idescat), it dropped by 1.3%. Regarding Spain’s economy, the INE declared that it fell by 1.4% while the Idescat indicates it plummeted by 1.9%. The reason for these differences is that data from both institutes are based on estimates and are still provisional. In any case, Catalonia is one of the Autonomous Communities with the mildest recession in Spain and continues to be that with the highest GDP, €198.63 billion. In addition, Catalonia is among those with the highest GDP per capita, set at €27,248 while the Spanish average was €22,772.

Multinational companies, railway operators, port authorities and government representatives met in the European Parliament to demand a boost of goods transportation by rail in Europe. They are pushing for the use of longer and heavier trains, able to transport more goods at a lower cost, with the consequent increase in competitiveness. These trains would circulate along specific corridors, such as the Mediterranean Railway Corridor, which will link the Gibraltar area with Central and Northern Europe passing through Spain’s Mediterranean ports and main industrial centres. The lobby organising the event, FERRMED, complained about the absence of representatives from the Spanish Government’s train operators.

The number of people unemployed and registered as such by the end of February at the Catalan Public Employment Service (SOC) increased by 3,359 people compared to the January figures. This is the lowest unemployment increase registered in the month of February in the last six years. In total, there were 661,176 people in Catalonia who were without a job and were looking for a new one. This sets a new historical record, with 23,228 more people unemployed than a year ago, representing a 3.62% increase. In the whole of Spain, unemployment increased by 59,444 people in February and for the first time the number of people officially registered as jobseekers topped 5 million individuals. Within the last 12 months, unemployment in Spain increased by 328,124 individuals, 6.96% more than those registered in February 2012.

Economic recession hit Catalonia even harder in 2012 than in 2011, when it dropped by 0.7%. The contraction was especially severe in the last quarter of the year. In December, Catalonia’s GDP plummeted by 0.6% compared to 3 months previously. The fourth quarter’s poor figures made the Catalan economy contract by 1.3% over 2012. In 2011, it also decreased but at a slower pace, dropping by 0.7%. For the whole of Spain, the economy plummeted by 1.8% in 2012 and by 0.7% over the last quarter of the year, compared to the figures from September 2012. The main reason behind the last quarter’s drop is the decrease in consumption by families, compared to the purchases made in the third quarter, before the VAT increase.

The 2,885 housing units sold in Catalonia during December increased by 4% compared to the figures from a year ago. The main reason for this rise is that, in January, the Spanish Government’s tax benefits applied when purchasing a house – approved to reactivate this economic sector after the collapse of the real estate market – will no longer exist. 66% of the houses and apartments sold were second hand, while the other third were newly built. For the whole of Spain, housing sales increased by 2.3% in December. In 2012, house sales dropped by 11.3% over 2012.

The economic recession has meant that Catalonia’s industrial production index decreased by 2.7% last year, according to the Spanish Statistics Institute (INE). In addition, the note indicated that the Catalan industrial sector has contracted for the last 10 consecutive months. However, Catalan industry had been less affected than the Spanish average, which plummeted by 5.9% in 2012. One severely affected sector was the production of long-life goods, in which car manufacturers are included, which decreased by 7.1% in December, accumulating 28 consecutive months in the red. Another sector with problems is the means of production, with a 7.3% decrease in December and 11 consecutive months of accumulated drops.

The number of unemployed people had reached 885,000 individuals by the end of 2012, a record high, with 110,000 more jobseekers than a year ago. This means that Catalonia’s unemployment rate increased from 20.5% to 23.9% in the last twelve months, breaking the previous record of 22.8% from the third quarter of 1985. In the whole of Spain, unemployment reached a rate of 26%, while a year ago it was 22.85%. It increased by 13.1% over the last twelve months, adding 691,700 more jobseekers to the list. Spain reached a historical high of 5.97 million people being unemployed.

Combined with the salary reductions and the taxation increase, the rise in inflation means that Catalans have lost purchasing power. The spending of the average Catalan family increased by some 110 euros per month compared to 2011 in order to buy the same amount of goods and services, while the net revenue decreased. In the whole of Spain, the inflation rate for the last 12 months was 2.9%, affected by the VAT increase approved by the Spanish Government. In Catalonia, it was higher due to fees adopted by the Catalan Government in order to reduce the public deficit: namely those affecting drug prescriptions and university education.

Nobody doubts that the Centre-Right Catalan Nationalist Coalition (CiU) will win the elections again, but it is not clear if it will obtain an absolute majority or even lose some MPs. However, these elections are not so much about parties but they have de facto turned into a plebiscite on the Catalan peoples’ right to self-determination and the organisation of an independence referendum. If the parties defending the organisation of a self-determination referendum and independence clearly win the elections as expected, Spain would face its deepest political crisis of the last three decades. Knowing this, the campaign has been the tensest ever, including dirty tricks being played by Spanish nationalists against the CiU. However, many citizens will also vote while thinking about the last two years of budget cuts. Thus, left-wing parties supporting independence are likely to get more support.

The Catalan economy contracted by 0.3% between July and September, although its results improved slightly compared to the previous quarter, when it shrunk by 0.5%. The tourism sector continues to grow and internal consumption continues to drop. Compared to a year ago, by the end of September, Catalan GDP has fallen by 1.4%.

The Catalan capital hosts the largest and most modern container terminal of the Mediterranean Sea, a true gate for cargo ships, linking Europe with the Middle East, Northern Africa and Asia. BEST, which stands for Barcelona Europe South Terminal, represents a €515 million investment by Hutchison Port Holdings (HPH). This week it has unveiled the first part of the project: 100 hectares to store containers, 1.5 kilometres of docking space for cargo ships, 98 cranes and a provisional international-width railway connection to compete with northern European harbours. However, the Spanish Government has not started the definitive railway connection yet, despite many promises.

2 million foreigners visited Catalonia in August, a 14.7% increase compared to August 2011. In total, in the first 8 months of the year, 10.4 million international visitors came to Catalonia, a 12.1% raise compared to the same period from 2011. Madrid was visited by 381,000 foreigners in August, a 29.7% decrease. In the whole of Spain, the number of international tourists reached 7.9 million in August, a 5% increase. Out of all the tourists who visited Spain in August, 25.4% went to Catalonia.

The Catalan Government approved a simplification of the red tape businesses need to get through by unifying all the public institution windows in a single point of contact and by rationalising procedures and certificates. By 2014 it is expected that 20% of the administrative procedures will be eliminated and 68% will simplified, involving procedures at local, Catalan and Spanish level. The measure will represent a €640 million saving for companies, according to the Catalan Government.

Foreign tourism in Catalonia continues to flourish despite the economic crisis. In July, there have been just over two million foreign tourists to Catalonia, 9% more than in the same month of 2011. In the first seven months of 2012, Catalonia hosted 8.4 million foreign tourists, a figure which represents 25.6% of international tourism to Spain. Catalonia has therefore consolidated its position as the most visited tourist destination in Spain.