03 June 2016
Bilbao Campus
The Socioeconomic Climate Report. First quarter 2016, prepared by Deusto Business School for the BBK, includes a detailed review of the latest statistical information on key social and economic indicators in our area for this period.
The report interprets this information and includes a forecast of the main global tendencies that impact business. An introductory note with an overall evaluation of the current situation and prospects for the short, medium and long term is also included, intending to disseminate relevant information to society as a whole.
Diagnoses and forecasts continue to indicates weak growth of the global economy
The last G7 summit held in Japan has only confirmed the scenario of the world economy's weak growth and the lack of consensus on measures that could boost a period of greater wealth creation.
The poor behaviour in the first months of 2016, especially evident from the volatility in financial markets, has led to lower growth expectations for 2016 and 2017, which are currently around 3% for the global economy.
This slight reduction in expectations has been compensated by lower risk levels concerning the evolution of the Chinese economy, stabilised oil and industrial metal prices and expected moderation in higher interest rates in the US.
Within this overall context, the Basque and Spanish economies have shown stronger growth with levels above the eurozone average and supported by a number of favourable factors in the overall socio-economic climate.
Biscay's economy has shown positive behaviour with interannual growth of 3.3% in the first quarter although it is expected to slow down in the following quarters.
The good news about Biscay’s economy is that recovery is stronger in the manufacturing industry, particularly for capital equipment, with higher production, employment and investment rates. The services industry is still growing although construction is less dynamic, especially in comparison to Spain as a whole.
Global variables continue to affect the steel, tube and oil refinery industries, which are going through a difficult period that requires considerable effort to overcome.
This situation, together with Spanish regulatory reforms that have reduced state regulated companies’ taxes by ten percentage points, have had a considerable impact on the total tax revenues collected via tax agreements in Biscay. These amounts for April were 2.8% lower (66.1 M€ less than in 2015).
The role of an advanced financial industry
As noted in previous reports, in light of a weak global economic scene, an economy like Biscay's has to boost its competitive advantages and overcome its limitations to maintain the levels of prosperity reached to date.
It is therefore vital to take full advantage of the present economic climate to reinforce the progressive recovery of industry, which creates the most stable employment and value added.
In view of the above, the challenge of maintaining the right financial environment is key. Biscay’s industry should grow without losing decision-making centres. Funds and instruments that act as levers for growth and the necessary investment are strategic factors.
New “Observatory of new economies in Biscay" from the next report
Beginning with the next edition (September 2016), the Behatokia Report will feature a new section with information on the development of new economies in the province of Biscay (collaborative economy, circular economy, common good economy, etc….)
Due to lack of official statistics, the first information will be mainly qualitative, prepared in collaboration with the leading agents in these fields in Biscay.
In absolute terms, the impact of these new economies is still limited and, in many cases, has not been included in official methodologies and indicators (GDP, etc....). However, they offer new opportunities which pioneering regions in Europe are taking advantage of to create and distribute wealth in a new way.
