Skip to 0 minutes and 15 secondsNatàlia Mas has been the Director General of Economic Analysis in the Catalan Government’s Department of Economics. We are meeting her at her office in Barcelona to ask her some questions about the current state of Catalonia’s economy, its priorities, and the challenges that the future poses. Natàlia has also worked for a decade as an economist for the Central European Bank, so she has an insightful view regarding the situation of the Catalan economy in relation to Europe and the rest of the world.
Skip to 0 minutes and 45 secondsCan you provide us a first overview of the economy of Catalonia? Let me start by saying that Catalonia due to its geographical location has always been a land of passage. A place of encounter of people with many different backgrounds. And I think this has only enrich its social but also its economic fabric. It’s also key to understand some of its distinct features in economic terms. So, let me outline a few of them. Catalonia is a very open economy. The end of 2016 data shows us that Catalonia has the third largest trade surplus in the EU. This means export minus imports over GDP. They are 12.6% after only Ireland and Luxembourg. Catalonian exports are increasingly looking abroad.
Skip to 1 minute and 38 secondsSo, in the last 20 years exports to the rest of the world have increased about 140% and exports to the rest of Spain by 6%. Another distinct feature that I would outline about Catalan economy is its diversification. It has a strong industrial sector, has a strong industrial tradition. It’s a sector that suffered gravely in the crisis but it is accumulating import and growth rates in the past years. A third feature I think it is that Catalonia is a strong pole of FDI attraction (Foreign Direct Investment). Catalonia hosts more than 7,000 multinationals. This is approximately 40% of all multinationals established in Spain. In the last two years, 2015-2016, Catalonia has attracted a bit more than 5,000 million euros in FDI.
Skip to 2 minutes and 36 secondsSo, these are the most important records in 24 years. So, record high FDI influx into Catalonia in the past years of more than 5 billion euros. And the last point that I think it’s important to highlight is that Catalonia has a well renowned scientific sector, scientific research sector. It has many scientific centers in the photonic science, in biomedical research, in the chemical sector… Just one figure, Catalonia represents 1,5% of the European population and accounts for 3% of scientific publications in Europe and 3,9% of ERC Grants (European Research Council Grants). I think these are the features of the Catalan economy. Has the economy fully recovered from the crisis?
Skip to 3 minutes and 35 secondsThe crisis was very strong, it started in 2008, and not only until end of 2013 Catalonia experienced the recovery. So, the economy of Catalonia started increasing in 2014 with the 2% GDP growth and in the last two years the growth has been very strong. Rates both in 2015-2016 of 3,5%. This is much higher records than our neighboring economies. For example, the euro area average last year was 1,8% of the total of the advanced economies 1,7%. So, the records are very positive. Then, why we have recovered in terms of GDP levels the figures of the big crisis period. In the labor market, we’re still lacking behind.
Skip to 4 minutes and 30 secondsConcretely, we’re standing now at an occupation level which is 11% lower than that of the year 2008. This does not mean that developments in the labor market have been very positive but still insufficient. So, from the peak of an employment of 23% in 2013, we’re now at 13%, but still higher than the euro area average of 9%. So, still many challenges remaining the labor market. Which do you think are the key priorities ahead in terms of economic policy? As we were saying, despite a strong GDP recovery, many people during the crisis have been expelled for the labor market. I think it’s a key priority to bring them back in.
Skip to 5 minutes and 21 secondsLong term unemployment is still relatively high, so I think the first key priority should be to promote more inclusive growth and active labor policies for those that are long-term unemployed, recovery of wage level and meet what we are observing are recovery of productivity levels. Secondly, further efforts for internationalization. As we were saying this is a key feature of Catalan economy, its openness, and I think this should continue. Further boosting also of productivity this is key for a sustainable recovery and for long-term growth levels. This has to be achieved by more investment and innovation, digitalization of the economy, also labor training policies that improve the human capital of enterprises.
Skip to 6 minutes and 21 secondsI think also maintaining, as we were saying initially also another key aspect of the Catalan economy is diversification, so maintaining the sector of diversification in promoting those high growth segments in relation to ICT technologies, etc. And lastly, I think also planning well for the sustainability of the wellfare state and also in view of changes in macro environments, for example it could be raising interest rates. So, I think in many challenges ahead, but I think we are channeling those with an improved situation and might improve situation as compared to some years ago.
Economy: Challenges & Priorities
Catalonia has an open economy based on diversification. Recovery from the economic crisis has been positive.
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