In full escalation of commercial tensions between Brussels and Washington, Spain is presented as a relatively protected economy against the possible impacts of a geopolitical fragmentation that is even deeper. This is reflected in the last economic newsletter of the Bank of Spain, published on Thursday, which points to a significant reduction in the risks linked to the country over the last years.
The European Union and the United States to try to close a commercial pact before the current tariff moratoriums expire, which represent a parenthesis in the economic offensive that the United States has opened globally. The bank supervisor warns that a deterioration in the relationship between the two blocks can put a key source of financing for the national economy at risk: foreign investment. However, it also emphasizes that, despite the uncertain international scenario, Spain reaches this phase with a more solid and diversified investment structure that just a few years ago. Therefore, what happens on July 9, when the tariff moratorium expires, the country starts from a more comfortable situation than that registered years ago.
The reason is that between 2021 and 2023 Spain has managed to reorient part of its most geopolitically aligned origins, reducing its exposure to countries considered further away in the strategic level. Specifically, foreign investment from the western bloc – formed by the United States and the EU member countries – represents 88% of the total, a proportion that has increased after the pandemic. At the same time, the participation of giants such as China and Russia is marginal and has continued to descend, placing itself on a threshold close to 1.5%, a level lower than other major economies of the Eurozone.
For example, foreign direct investment tickets from the EU increased between 2019 and 2023 by 28 percentage points in France, to an 80% stock of GDP, and in around 20 points in Spain, up to 90%. In contrast, in Germany, EU’s average relative weight decreased by eight points, to about 41%.
In addition to this, Spain maintains one of the highest rates in Europe with a foreign direct investment, with an average of 2.3% of GDP in the last two decades – the double that the average of the eurozone. This evolution of direct foreign investment flows in Spain, the supervisor continues, has contributed to the increase in stock of pending investments, which in 2023 and 2024. There are seven percentage points more than in 2019 and around double the main members of the European Union.
The data of the Bank of Spain also suggests that Spain’s greatest exhibition to the so -called neutral block, which includes the economies of Latin America, the Middle East and Southeast Asia, provides a differentiating dimension against other European economies.
That is, the degree of exposure of Spain to geopolitical risks has been reduced generalized by sectors, with a specially notable decrease in the most strategic activities and financial services. And that lower vulnerability is reflected in an aggregate geopolitical exposure lower than in France and Germany. Although the presence of neutral countries (less to trust than allies) is greater in Spain, its low exposure to the most geopolitically distant countries compensates for this difference, bringing the country’s risk profile closer to that of its main community partners.
The panorama collected by the Bank of Spain could change based on what happens with the conversations between Brussels and Washington, which could adulterate the stamp. At the moment, 18.7% increased by May with respect to the previous month, until it was 71,500 million, a fact also published this Thursday by the Office of Economic Analysis. With respect to the same month of 2024, the American commercial deficit of May increased by 50.4%, according to EFE.
With regard to the European Union, the US trade deficit increased by 14.25% compared to the previous month, until they add 21,887 million dollars. With Mexico and Canada, also threatened by the so -called reciprocal tariffs, the commercial deficit increased 29.53% and 59.45%, to 18,165 million dollars and 2,757 million dollars, respectively.
