Spain

Spain is located in southwestern Europe and occupies most of the Iberian Peninsula. With an area of 505,990 km², it is the fourth-largest country in Europe. As of January 1, 2024, the population is around 47.6 million, an increase from 47.4 million in 2023.

Major cities include the capital Madrid, with 6.7 million people in the metropolitan area, Barcelona (5.5 million), Valencia (2.5 million), and Seville (1.9 million). Spain is one of the leading European states with a strong regional and historical identity, reflected in its 17 autonomous communities (comunidades autónomas).

Economic Conditions

Spain’s gross GDP for 2023 was estimated at around 1.380 trillion euros, with a real growth rate of 2.3% compared to 2022.

The total value of Spanish exports in 2023 was 400 billion euros, while imports reached 430 billion euros. Compared to the previous year, exports rose by 4%, while imports decreased by 2%. The trade balance recorded a deficit of approximately 30 billion euros.

Spain’s current account in the balance of payments registered a surplus of 12 billion euros in 2023, up from a 10-billion-euro surplus in 2022.

Regarding Spain’s general budget, the public deficit for 2023 was about 4.5% of GDP, improving from 5.1% in 2022. According to the Ministry of Finance, as of December 31, 2023, public debt stood at 1.54 trillion euros (about 110% of GDP). Spain has maintained a high debt level, a legacy of the sovereign debt crisis and the COVID-19 pandemic.

The average exchange rate in 2023 was 1.07 dollars per euro. The consumer price index (CPI) in December 2023 showed a +3.7% increase compared to December 2022. Inflation remained relatively controlled, thanks to favorable monetary and fiscal policies. According to INE, in December 2023, the unemployment rate was 11.6%, down from 12.3% in 2022. The number of unemployed (ages 16-64) is around 2.7 million, trending downward with a moderate labor market recovery. In December 2023, the average gross monthly salary per employee was 2,200 euros (about 2,350 dollars), while the average net monthly salary was approximately 1,800 euros (1,925 dollars). Spain’s population at risk of poverty is 21.0%, a slight improvement from 21.8% in the previous year.

Forecasts

The European Commission projects GDP growth of 2.4% for 2024, with growth of 2.6% for 2025 and 2.8% for 2026. Rating agency Fitch has confirmed Spain’s rating at A- with a stable outlook, noting improvements in unemployment and deficit reduction, though highlighting the need for further reforms to maintain long-term sustainability.

Country Risk

Country risk for Spain is considered moderate, with strengths tied to political stability and EU membership, but risks associated with high public debt and structural vulnerabilities in the labor market.

Foreign Direct Investments

In 2023, Foreign Direct Investment (FDI) in Spain reached 28 billion euros, up from 25 billion euros in 2022. Key sectors attracting FDI include real estate (30% of the total), manufacturing (20%), and tourism (15%).

FDI distribution by country of origin:

The main countries of origin of FDI in Spain are:
1. United States: 8 billion euros
2. United Kingdom: 5 billion euros
3. Germany: 4 billion euros
4. France: 3 billion euros
5. Netherlands: 2 billion euros

Geopolitical Analysis

Spain holds a strategic position both geographically and politically, at the crossroads of Europe, Africa, and the Atlantic, with significant implications for foreign policy, security, and international relations.

Relations with the European Union

As one of the largest EU members, Spain is committed to European integration. It is the EU’s fourth most populous country and plays an active role in EU policy. Its economy is interconnected with the eurozone, benefiting from EU structural funds for territorial cohesion and economic development. Following the economic crisis and the COVID-19 pandemic, Spain has been a major beneficiary of NextGenerationEU, receiving around 140 billion euros for recovery and economic transformation.

Politically, Spain supports common EU policies, advocating for greater cohesion in areas like defense and migration management. It favors a multilateral approach and works closely with other southern European countries, such as France, Italy, and Portugal.

Transatlantic Relations

Spain maintains strong ties with the United States, both economically and militarily. A NATO member since 1982, the Rota airbase near Cadiz is one of NATO’s most important strategic military infrastructures in the Mediterranean. Spain and the United States have historically cooperated in security and defense, as well as in economic relations, with the U.S. being a major foreign investor in the country.

However, transatlantic dynamics are influenced by U.S. geopolitical priorities, which have increasingly focused on the Indo-Pacific. This has driven Spain to reinforce its role as a bridge between Europe and Latin America, offering a channel for European influence in the region.

Relations with Latin America

Spain enjoys strong historical, cultural, and linguistic ties with Latin American countries. This provides Spain a significant advantage in its relations with the region, where it remains a major economic and diplomatic player. Spanish companies have substantial interests in Latin American key sectors like energy, telecommunications, and infrastructure. Spain is viewed as a trusted partner in areas like economic cooperation, conflict management, and combating climate change. Politically, Spain often acts as a mediator in Latin American crises, such as negotiations between the Venezuelan government and opposition or peace processes in Colombia.

The Mediterranean and North Africa

Spain’s geographical location puts it at the forefront of North African and Mediterranean dynamics. Stability in this region is crucial for Spanish national security, especially concerning issues like terrorism, migration, and drug trafficking. Spain collaborates closely with Maghreb countries, particularly Morocco, with which it has complex but essential relations. Morocco is a key partner for irregular migration control and counter-terrorism cooperation, though tensions exist over the Western Sahara and the sovereignty of the Spanish cities of Ceuta and Melilla, located on the Moroccan coast. Algeria is another key player in the region, mainly due to its natural gas supply. However, Spain’s relations with Algeria have worsened due to Spain’s policy shift on Western Sahara in 2022, when Madrid supported autonomy under Moroccan sovereignty, causing a diplomatic crisis with Algiers.

Migration and Security

The migratory flow from North and sub-Saharan Africa is a significant concern for Spain. Migrant routes, such as the Western Mediterranean and Canary Islands routes, pose logistical and humanitarian challenges. Spain is one of the countries most exposed to irregular migrants arriving in Europe, actively working to prevent illegal landings by collaborating with the EU and transit and origin countries, such as Morocco and Mauritania. In terms of security, Spain is also integral in the fight against Islamic terrorism, especially after jihadist attacks in the past. Cooperation with European and Mediterranean allies is crucial to prevent new threats and ensure stability in the Mediterranean.

Internal Tensions: Catalonia

A major internal geopolitical issue for Spain is the situation in Catalonia, which made a strong push for independence in 2017. Although the secession attempt failed and the Spanish central government regained control, tensions between Madrid and Barcelona remain high. The Catalan issue impacts not only internally but also Spain’s relations within the EU, where many member states view similar separatist movements within their borders with concern. Managing this crisis is crucial for internal stability and Spain’s international image. Recently, the central government has initiated new dialogue phases with Catalan independence leaders, seeking a political compromise that can defuse tensions.

Global Position

Spain seeks to play a more active role in international organizations. It has been a non-permanent member of the United Nations Security Council and plays an active role in peace missions and international operations, both under NATO and the EU. Spain also engages actively in multilateral forums on issues such as climate change, human rights, and the regulation of economic globalization.

In conclusion, Spain is a significant geopolitical player regionally and globally. The country has a strong network of alliances but faces internal and external challenges linked to its strategic position in the Mediterranean and its roles in the European Union and NATO. Internal political dynamics, particularly the Catalan issue, may influence the country’s stability, while relations with Latin America, North Africa, and the United States remain crucial for its foreign policy.