Political instability is the main risk for investments in Spain in 2020
Political instability will be the main risk for investments in Spain during 2020, according to the fourth edition of the survey "Spain as an Investment Opportunity" published today by Kreab, a communication and public affairs consultancy firm founded in Sweden in 1970.
The survey gathers the opinion of 62 national and international investors whose aggregated assets under management amount over 380 billion euros.
Despite their concern regarding the political situation, 85.71 per cent of those surveyed would recommend to invest in Spain and give our country an average score of eight out of ten as an investment destination.
Thus, more than half of investors consulted (60.71 per cent) raised their investment volume throughout 2019, while 28.57 per cent kept the same volume and 10.71 per cent reduced it. Looking ahead to 2020, 44.45 per cent of investors plan to increase their investments in our country, 29.63 per cent state that they will keep it the same and 14.82 per cent plan to reduce it.
After being asked about which, in their opinion, are the economic sectors with the greatest growth potential in Spain, investors highlighted tourism, followed by health, real estate, energy, technology, consumer, financial services, industry, telecommunications and the automotive sector.
Upon asking investors about the main risks they would have to face investing in Spain, 83 per cent of them highlighted political instability as one of their greatest concerns, followed by the situation in Catalonia, which is positioned as the second highest risk (43.33 per cent) when it comes to allocate capital in the Iberian country.
However, 38 per cent of investors consider that the political situation in Spain is in line with the average of the rest of the European countries and 45 per cent consider it positive in relation to other EU countries.
Regarding the most urgent reforms needed to encourage investment in Spain, investors consider it necessary to give priority to a fiscal, followed by administrative division, labour and energy reforms. Other changes investors consider important to promote investment in our country include the pension and judicial systems. Additionally, they pointed out the importance of promoting digitalisation and facilitating SMEs' access to financing.
The political situation in Catalonia still has an impact on the perception that investors have of the Autonomous Community as an investment destination. According to the results of this year's survey, 23.33 per cent of investors will refrain from investing in Catalonia as long as political tensions continue. Likewise, 30 per cent say that the political situation in Catalonia has had a very negative effect when considering the Autonomous Community as an investment destination and 16.67 per cent state it has had a slight negative effect.
However, there has been a certain improvement in the perception of the Catalonian conflict. These percentages are smaller than those obtained in the survey that Kreab conducted in 2017, when 55 per cent of those consulted stated that they would not consider Catalonia as an investment destination due to the political situation. Results also showed that over 80 per cent of them considered events in Catalonia would have a negative or very negative impact on their investment decisions in the region.
Regarding how the Catalan political situation might affect investment decisions in the rest of Spain, 33.33 per cent of those surveyed believe that it would have a slight negative impact and 13.33 per cent that it would have a significant one. On the other hand, 40 per cent thought it would have no impact what so ever. These results also reflect a certain improvement over previous years.