Published on Monday, July 17, 2023

Spain | The tale of the current account

The Spanish economy saves more than it invests, exports more than it imports, pays less and less interest than the returns it generates abroad, and will do all this at record high levels this year.

Key points

  • Key points:
  • The result will be a high current account surplus and the continuation of a deleveraging process with the rest of the world that began in 2008.
  • The INE (National Statistics Institute) has announced that the current account surplus reached 6.3% of GDP for the first quarter of 2023. To appreciate the relevance of this figure, it should be recalled that in 2007 the deficit was 9.1% and between 1986 and 2008 it was 5.5% on average per year.
  • To finance these imbalances, the Spanish economy needed flows from abroad, which meant that the net international investment position (NIIP: the difference between an economy's external financial assets and liabilities) was in deficit and reached 100% of GDP, one of the highest figures in Europe.
  • Perhaps the most important element in the external balance will be the transformation of the energy sector. Both households and businesses have changed habits and invested to become more efficient in their use of electricity and fuel.
  • However, the current account surplus is also a symptom of a lack of profitable investment projects. Spending on housing construction or transport equipment remains abnormally low, which could be explained by a volatile regulatory environment.

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