05 mar 2018


Report Spain’s Outlook 2018

Spanish businessmen and managers convey the most positive assessment of the last eight years with regards to the economic situation, as outlined in the report “Spain’s Outlook 2018”, prepared by KPMG with collaboration from the Spanish Confederation of Business Organizations (CEOE). Thus, 60% of them think that the current situation is "good" or "excellent", 23 percentage points more than in 2017 (37%), while 36% still consider it "so-so".

Spain’s Outlook 2018
Spain’s Outlook 2018

Over a 12-month outlook, the trend remains unchanged, although it does stabilize. More than half (53%) of the almost 1,900 entrepreneurs and top executives surveyed believe that the situation will remain the same in 2018, while only 11% fear that it will worsen.

Against this backdrop, business forecasts for 2018 are positive. Almost eight out of ten (77%) of the Spanish entrepreneurs and top executives surveyed in this report expect a rebound in turnover this year; 15% expect stability and only 7% fear a drop in sales.

With respect to investment plans, 57% have plans to increase investment, especially in new technological tools; and only 9% believe they will end up reducing this item. Their forecasts on how their headcount will progress are also positive: the majority (45%) expects to carry out more hiring; 39% predict stability and 17% plan to carry out adjustments.

For Hilario Albarracín, president of KPMG in Spain, the data "reflects the stabilization of the economy and that the adjustments made in recent years are bearing fruit". In this regard, he adds: "the drive to invest, innovate and hire is the best way to consolidate the recovery and generate sustainable growth".

For the president of CEOE, Juan Rosell, results for 2017 once again demonstrate that the Spanish economy continues on the recovery path. A GDP growth of 3.1% and a job creation figure around 600,000 people confirm the strength of our economy, which is driven mainly by the importance of the business sector and its desire to invest and innovate.

It is from this sector that we ask for structural reforms, while we warn that, without them, and with political uncertainty, excessive regulation and geopolitical tensions, the Spanish economy could face serious limitations.

The digital transformation gains ground

The main strategic priority for the top executives surveyed in 2018 lies on improving processes to gain efficiency and, thus, be able to tackle the growing competition arising on all fronts, mentioned by 55%.

Moreover, in light of the emergence of the digital economy and the different technological developments, digital transformation has gained ground among the strategic priorities of Spanish companies, now standing as the second most important one and having been mentioned by 49% of the people surveyed.

Eight out of ten entrepreneurs claim to have already started digitization programs. These have enabled improved relationships with customers (claimed by 52%), reduced costs and improved efficiency (claimed by 48%).

The top five strategic priorities for 2018 also include development of new products and services, international expansion and disruptive innovation.

Main threats: political uncertainty

This report by KPMG and CEOE also includes the main concerns of Spanish entrepreneurs and top executives. The main threat identified for the Spanish economy in 2018 is political uncertainty (82% of the responses), followed by geopolitical tensions (41%) and the risks that may be generated by the European Central Bank ending its expansionary monetary policy (34%).

Asked about the main threats to their specific businesses, political uncertainty is mentioned again (for 54%), followed by regulatory burdens (44%) and increased competition (42%).

As for the Brexit, among the most worrisome consequences for Spanish companies due to the possible impact are tariff barriers and the contraction of the UK’s economy (mentioned by half of the entrepreneurs surveyed). Other concerns include possible regulatory changes (46%) and depreciation of the pound (43%).

On the other hand, when it comes to pointing out what they consider should be the Government’s priorities in the economic field, entrepreneurs and managers ask, more than anything, for administrative simplification, education and training for the development of skills and the promotion of innovation.

Balearic Islands and the Basque Country, the most optimistic regions

By regions, the most optimistic businessmen are found in the Balearic Islands, where 87% think the current situation of the community is "good", and the Basque Country, where 80% describe their situation as "good". On a twelve-month outlook, the Basque Country once again stands out as the most optimistic about the economic performance of its region along with the Community of Madrid and La Rioja.

At the opposite end, Extremadura, Asturias and Catalonia express the lowest levels of optimism with regard to the economic situation of their regions. Almost seven out of ten respondents from Extremadura describe it as so-so, an impression that six out of every 10 entrepreneurs from Asturias and 44% of Catalan entrepreneurs share with regards to their respective communities.

Automotive and real estate sectors, the most positive

Among the different sectors, the Automotive sector stands out as the one with the highest confidence levels: 82% consider that the situation is "good" or "excellent". Entrepreneurs and managers from this industry are also among those who expect higher sales growth and the ones that expect to hire the most. The second most optimistic sector is real estate: 79% think that the situation is "good" or "excellent".