Invest in Spain

The United States ‘subprime crisis’ has developed into an international financial crisis the outcome of which is still unknown.

Nevertheless and despite the fact that its future effects on world financial flows and specifically on FDI are unknown, certain forecasts can be made.

The latest data published by the UNCTAD (United Nations Conference on Trade and Development) in January 2008 point to a moderate slowdown in world FDI growth resulting from threats to world economic growth such as the toughening financial conditions of the markets and the increasing probability of recession in the United States. Despite this, in 2007 FDI hit record levels reaching values close to 1.5 billion dollars, and in tandem with a reduction in merger and acquisition activities during the second half of the year.

The Economist Intelligence Unit in its “World Investment Prospects to 2011” report forecasts a slight fall of 4.6% in nominal terms in 2008. However, growth is set to return for the 2009-11 period with annual increases of around 4.5% amounting to 1.6 billion dollars in 2011.

Moreover, the UNCTAD also points out in its January report that there are other positive factors such as the strengthening of world trade, the continual expansion of the economy, the consolidation of company profits and the intensive activity of investment funds and venture capital in the current international arena that foster FDI growth in the short and medium terms.

What’s more, 76% of the companies surveyed by the UNCTAD in its “World Investment Prospects Survey 2007-2009” report asserted that they expected to increase their investments over the 2008-2009 period.

In Spain’s case according to the latest available data on the Balance of Payments of the Bank of Spain for the January-November 2007 period, the progression of FDI is very positive amounting to 40.765,9 million euros, 156% more than the amount received in the same period of 2006 (15.906,5 million dollars).

As for short to medium term forecasts for Spain, the Economist Intelligence Unit expects the increase in FDI in Spain to be sustained, close to 42,400 million dollars in 2008 and reaching 50,400 million dollars in 2011.

According to investors surveyed by the Economist Intelligence Unit, these positive future prospects are bolstered by easy access to EU markets, by the major political and financial support mechanisms in place for multinationals, by a new highly trained and flexible labor force and by an internal market that despite the slowdown, is still one of the most dynamic in Europe.