Spain’s business climate, thanks to the Euro debt crisis, has fallen on hard times in recent years. The European Union’s fifth largest economy enjoyed a long period of above average growth that began to slow in late 2007. The ensuing 2008-2009 credit crunch and world recession manifested itself in Spain through a massive downturn in the property sector, the ensuing decline in construction, and falling consumer spending. Since then, Spain’s large budget deficit and poor economic growth prospects have made it vulnerable to financial contagion from other highly-indebted euro zone members, despite the government’s efforts to cut spending, privatize industries, and boost competitiveness through labour market reforms.
Even with the gloomy short to mid-term prognosis, the long-term fundamentals for Spain business remains bright. A major reason is its close economic ties to high-growth Latin America (region’s second biggest foreign investor after the US). Not only does Spanish corporate culture have extensive experience doing business in Latin American markets, but demographics in the “new world” offer a large pool of future labour when other European nations will be facing pressures on sustained growth due to low fertility and falling net immigration.