16 September 2016 – Expansión
According to a report from the BBVA Foundation – Ivie, until 2015, growth in foreign investment focused more on the purchase of debt instruments and share capital (portfolio investments) than on direct investments (involving the purchase of more than 10% of the capital of a company). “By contrast, during the first half of the year, portfolio investments have decreased and direct investment has recovered (by 13%)”, according to the document.
In general, foreign investment has a high correlation with the economic environment and in Spain (investment decreased from €58,128 million in 2009 to -€44,900 million and -€32,455 million in 2011 and 2012, respectively) there was a slight recovery as the economy emerged from the recession. Thus, in 2015, foreign investment was 2.6 times higher than at the start of the crisis, in 2008.
Composition of investment
By type of investment, direct foreign investment has varied significantly in terms of its sector composition. In this way, it is worth highlighting “the increase in investment in real estate activities since 2012, which accounted for 12.9% of total foreign investment in 2012 and had increased to 27.1% by March 2016”. The recovery in terms of investment in the construction sector is also noteworthy, above all in 2015, when it accounted for 20.2% of the total, although that figure had decreased to 16.1% by March 2016. “Based on the data for 2015, real estate investment (in the broadest sense) accounted for a third of the total (€7,700 million), up by 62% compared with a year earlier and 4.4 times higher than in 2008”.
According to the BBVA Foundation-Ivie, the fact that the increase has taken place in H1 2016 is good news, “although the growing orientation towards real estate activities weakens the contribution to productivity gains that the Spanish economy (so desparately) needs”.
It is important to take into account that portfolio investments are more volatile and sensitive to the economic cycle. Meanwhile, although direct investment is less important in terms of the productive investment of a country, it has significant qualitative features: it helps stimulate certain production sectors, increasing internationalisation and technological levels; it focuses on sectors with more human capital and it is very important for increasing productivity.
Original story: Expansión (by M.G.M.)
Translation: Carmel Drake