In this connection, it is worth offering some figures illustrating the scale of this change. Specifically, the Spanish economy’s current account balance has improved by more than 11 percentage points (pp) of GDP since the start of the crisis, turning from a deficit of 9.4% of GDP in 2007 to a surplus of around 2% in 2019. In terms of components, while all captions have contributed positively to this adjustment, of most note has been the correction of the net balance of non-energy goods and of the primary and secondary income balance. The contributions of the latter to the improvement in the total balance in this period were almost 6 pp and 3 pp, respectively. But the energy goods, tourism and non-tourist services balances have also each contributed about 1 pp. As suggested, among the key factors behind this correction of the external balance are the gains in competitiveness achieved in these past ten years. These are estimated to have contributed both to the increase in the structural level of exports and to their geographical diversification towards markets with greater growth potential, thereby resulting in a favourable market-share performance. At the same time, imports have been seen to be flatter in relation to the rise in final demand, despite the momentum of exports in firms and sectors with a high import content. That likewise points to an improvement in the competitiveness of the resident productive sector compared with foreign competitors.
This level is 1 pp of GDP higher than the average volume of this type of investment during the crisis. In any event, foreign direct investment in Spain was impacted to a lesser extent than portfolio investment during the recession, with no divestment recorded in any year, in contrast to what occurred with portfolio investment. That reveals its greater stability compared with other forms of international investment. Another notable characteristic of the recent trend of this item is the decline in the relative weight of these capital inflows in the form of debt liabilities – which comprise intra-group loans and have scarcely accounted for 12% of the total since 2013, compared with over 30% during the pre-crisis years (average between 1999 and 2007) – and the increase in investment in the form of equity. Thus, while in recent years the volume of foreign direct investment has, in terms of GDP, been around 1.5 pp below that observed during the pre-crisis expansion, its composition is sounder, since it is less vulnerable to adverse shocks. Challenges The future outlook for the foreign sector will be influenced by protectionist tensions and by the uncertainty still surrounding the final shape of EU-United Kingdom relations in the wake of Brexit. On the evidence available, the protectionist tensions between the United States and China may be expected to affect global trade flows in two ways: on one hand, a notable direct impact via the global value chains; and on the other, indirect adverse repercussions via their effects on global confidence and investment.