The recession in the German economy is “not good news for Spain”. First Vice President of Government, Nadia Calvinoso he admitted that prospects deteriorated Germany “The European economy is highly integrated and Germany is one of our main markets,” Calviño told the press in Washington, where he attended the autumn meeting of the European Union. International Monetary Fund (IMF). The German Government presented on Wednesday its new official forecasts for the German economy in 2023, which predict an economic recession with a decline of around 0.4% and high inflation of 7%. And Calviño recalled this famous adage this Thursday: “Europe gets cold when Germany sneezes” highlighting its infectious capacity european locomotive to the rest of the eurozone. “It’s a good metaphor for the current situation,” the vice president said.
The Spanish economy, in particular, is one of the most intertwined with the German economy, due, among other things, to the automobile industry, tourism, and relationships stemming from direct and portfolio investments. A worsening of some European partners could cut almost half a point from Spanish growth, according to calculations by a research service that is currently wrapping up its new macroeconomic picture. Hence the concern of the Spaniards about the German “sneeze”.
ECB forecasts
The expectation of recession in Germany will cause the growth to be downward in the entire euro area. In its September forecasts, the ECB lowered its GDP growth forecast for 2023 for the Eurozone to 0.9% and added that in an unfavorable scenario, there could be a 0.9% drop in the production of the Euro economy. European Central Bank (ECB) General Manager of Economy, Oscar ArcAt an informative meeting this Thursday by the Association of Economic Information Journalists (APIE), he admitted that “autumn indicators give the feeling that the slowdown in the German economy is a little more intense than we expected in September” and that this will weigh on it. about new estimates that the body should release in December.
automobile industry
Spain is the second largest automobile manufacturer in the European Union after Germany, and the automobile industry is heavily dependent on Germany. The value chain of the Spanish automobile industry requires components from the German headquarters of brands with factories in Spain. Volkswagen, Audi or Seat. At the same time, strong Spanish parts industry It has a good portion of its market in the German industry. According to the estimations of the Bank of Spain, 48% of the value added of the Spanish automobile industry originates from within the country. The remaining 52% depends on the supplies from abroad and especially the 10% depends on Germany. As a result, any stoppage in German factories resulting from possible constraints on energy supply will have immediate consequences on industrial production in Spain in this sector.
intermediate goods trade
Germany second export customer Spain is behind France. In contrast, Germany main supplier of foreign goods for Spain. 10% of Spanish exports went to Germany in 2021 (32,399.7 million in total); meanwhile, 11.2% imports Spanish was provided by the German country (38,276 million). The balance of payments is in favor of Germany with a total of 5,876.7 million in 2021.
First of all, Spain exports cars and motorcycles to Germany (5,491 million in 2021), but most of all, intermediate products for industry such as capital goods, chemical products, shipping materials, auto parts, industrial machinery, semi-finished products, iron and steel. According to ICEX data, any disruption to the industry would not only reduce the sales of the 14,277 Spanish exporters trading with Germany, but could also cut the supply needed by Spanish factories as purchases from the German country are mostly intermediate goods. for Spanish factories.
Third export market of tourists
Germany is the third country of origin. foreign tourists Visitors to Spain. A total of 6.5 million German tourists visited Spain until August, falling behind the record for the United Kingdom (10.19 million) and France (6.99 million). Germany is the first country to send tourists to the Balearic Islands and the second to the Canary Islands. As a result, these are the two autonomous communities that will suffer the most from a possible cut in German tourist spending. By August, German tourists left a total of 7,741 million foreign visitors (58,895 million) in Spain, 13% of the total foreign visitor revenue.
Fourth foreign investor
Germany is the fourth foreign investor in Spain (with a capital stock of €50,168 million in 2020 according to ICEX data) and the eleventh recipient of Spanish investment (with 14,651 million shares). Data until June 2022 shows that investment flow continues; Spanish investment in Germany amounted to 504 million euros in the first half and German investment in Spain at that time amounted to 541 million euros. An economic slowdown can slow or delay investment projects.
Source: Informacion
Christina Moncayo is a contributing writer for “Social Bites”. Her focus is on the gaming industry and she provides in-depth coverage of the latest news and trends in the world of gaming.