Spain | Impact of the U.S. fiscal plans in Spain

Summary

U.S. fiscal plans are expected to boost demand in global markets, thus positively impacting global GDP. The “direct” impact on the Spanish economy is expected to be small, given Spain’s low trade and financial exposure to the U.S., but the “indirect” impact could turn out to be higher.

Key points

• Key points:
• The U.S. fiscal response to the crisis has been significant. Added to the initial stimuli are the fiscal programs for 2021 and the Biden Plan for 2022-2024. These are expected to boost U.S. demand in global markets.
• The direct impact on the Spanish economy is expected to be small, given Spain’s low trade and financial exposure to the U.S., but the indirect impact could turn out to be higher.
• Through the trade channel, the capital goods and semi-manufacturing sectors are those with the greatest exposures to the U.S. and will be together with food sector, the most favored by the fiscal plans.
• In the financial channel, foreign direct investment (FDI) from the U.S. represents less than 2% of total FDI in Spain, so the impact is expected to be moderate.
• The “indirect” effects - higher growth in the world economy and the euro zone, as well as greater confidence and less uncertainty in capital markets - would have a positive impact on Spanish exports and GDP.

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