Spain | Investment on the rise amid the chaos

The Spanish economy has been in turmoil for a couple of years now. Despite this, investment has already recovered to the levels of the 4Q2019 and even the purchase of machinery and equipment is 17% more than that observed more than two years ago.

Key points

• Key points:
• The recovery of gross fixed capital formation after an economic shock is usually more protracted than that of GDP. On this occasion, however, the absence of imbalances in the pre-pandemic period and public policies has prevented a larger adjustment during the crisis.
• At the moment, much of the capital accumulation effort is being concentrated in machinery, rather than in real estate or buildings. Machinery reflects the need for companies to be more competitive, to automate and digitize processes or to take advantage of highly skilled workers.
• Unlike previous cycles, there is also a lack of investment in transportation, which is affected by the changes that society is going through as a result of the pandemic, the increase in fuel prices and the lack of availability of vehicles due to the disruption of global supply chains.
• Companies seem to be banking on the transition toward a reliance on renewable energies, digitalization and people's health care.
• This is without observing the impact of the execution of the NGEU funds.

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