An overview of Spain
Spain is a sovereign state located in southwestern Europe on the Iberian Peninsula. The country which is officially known as the Kingdom of Spain is bordered to the south east by the Mediterranean Sea, by France and Andorra to the north and by Atlantic Ocean and Portugal to the west. Spain covers an area of 504,750 square kilometers (194,884 square miles) including Canary Islands and the Balearic (Worldwide Governance Indicators, 2011). It is the second largest country in both the European Union and Western Europe after France. In Europe, it is the fourth largest country after Russia, Ukraine, and France.
The country’s terrain is made up of high plateaus, narrow coastal plains, mountainous regions, and lowland area. The country experiences Mediterranean climate, which is characterized by dry and warm summers (OECD, 2012). The southeastern part of the country experiences semiarid climate, which extends after the summer. The coastal regions of Basque, Asturias, Galicia, and Cantabria experience oceanic climate, which is influenced by the ocean. The Spanish mainland and the Balearic Isles are 1 hour ahead of the Greenwich Mean Time (GMT) during winter and 2 hours ahead in the summer (OECD, 2012). The Canary Islands are on GMT zone. Marketers can use these climatic conditions to determine seasonal items such as clothes, fruits, and vegetables and to market both local and foreign destinations.
During the census conducted in 2010, according to the National Institute of Statistics (INE), the population was at 46,030,109 with a population density of 93/km2. The capital city Madrid had a population of 3.3 million (OECD, 2012). The other main cities have their population as follows, Barcelona (1.6 million), Valencia (809,267), Seville (704,198), Malaga (568,507), Zaragoza (675,121), and Bilbao (353,187) (Rossano, Llonch, and Pilar, 2006). The Spaniards speak Spanish which is the official language while other languages include Catalan-Valencian, Galician, and Basque. Education is compulsory to the age of 16 years. The literacy level is therefore very high at 97.6%. The unemployment rate is at 20.8% with 23.13 million people in the work force according to 2011 estimates (OECD, 2012). Marketers from foreign countries need to have a good understanding of Spanish to operate properly. There is also abundant source of labor. Cheaper semi-skilled labor can be sourced from the immigrant population that is available in the country.
Spain is organized by a parliamentary government with a constitutional monarch currently run by King Juan Carlos I who was proclaimed king in 1975.The executive branch is made up of a Council of Ministers is subject to confirmation by the Congress of Deputies through legislative elections even though it is appointed by the monarch. The office of the prime minister is currently held by Mr. Mariano Rajoy. The political environment is remarkably stable and the government has put in place policies to improve the business environment for both local and foreign investors (Rossano, Llonch, and Pilar, 2006).
Spain is a Capitalist mixed economy with a GDP of $1.487 trillion. This matches the economy of Germany and France. It is the 13th largest in the world and the 7th largest economy in the Organization for Economic Cooperation and Development (OECD). The country is a member of the European Union and adopted the Euro in 2002. Research into the quality of life by the Economist Intelligence Unit categorized Spain within the top 10 nations with the highest quality of life ahead of more developed countries like United Kingdom, Germany, France, and South Korea. Spain is therefore an attractive market for consumer goods especially organic food, horticultural products, tourism destinations, and technological gadgets (Worldwide Governance Indicators, 2011)
The Economy before recession
Until the global economic recession hit, the country’s economy was boosted by the Spanish property bubble which begun in 1997. The boom was fed by low interest rates, which were brought by the adoption of the Euro coupled with increased demand for housing due to immigration. Before the bubble exploded in 2008, the Spanish economy avoided the virtual zero growth rate that was experienced by other large economies in the EU. The economy created more than 50% of all the new jobs in the EU between the year 2000 and 2005. The economy attracted a significant amount of foreign investment because it was regarded as one of the most dynamic investment destinations in the EU.
At the peak of the global real estate boom, construction represented an impressive 16% of the GDP. The industry also accounted for 12% of employment. If the growth of the economy experienced in 2007 had been sustained, Spain would have been on course to overtake Germany by 2011. The collapse of the housing boom in 2008 brought this to a halt. Spain’s per capita slipped to $29,830. Investment opportunities after the recession
The 2008/2009 credit crunch and economic recession that affected the global economy caused a massive down turn in the real estate sector. Homeowners struggled to payback their mortgages as property prices plummeted due to reduced demand for property. Real estate development slowed down almost to a halt. For an investor buying developed property might be the better business move because prices have considerably gone down. Spain’s banks were able to salvage the situation by enforcing a conservative financial regulatory regime. The country’s financial institutions had learned valuable lessons in crisis management from similar banking crisis in 1979 and 1993.
The economy has started to emerge from the recession with a considerable decline in the construction industry amid an oversupply in housing. The government has made a great effort to minimize its budget deficit from 9.2% of GDP in 2010 to 6.5% in 2011 by minimizing on spending. The government has also undertaken labor market reforms and the privatization of several industries, which has vastly opened up opportunities for the private sector and foreign investors to enter the economy by buying into the state corporations. The government also undertook a massive bailout plan to the tune of $15 billion for its banks in 2010.This money was used to restructure the banks and various financial institutions. The economy is therefore stronger with the business environment becoming more stable.
Attractive markets and opportunities in Spain
Spain remains is among the leading destinations for tourism around the globe (Enrique, 1996). In the last four decades, Spain has seen growth in tourism enabling it to record an annual turnover in excess of $55billion in addition to being the second biggest tourist market in the world with. The industry has been supported by a rich menu of cultural monuments and scenic endowment and good infrastructural development. The country has lovely beaches and islands, which attract millions of tourists annually. The high per capita income of its citizens which was quoted at $30,600 in 2011 means that they have a high purchasing power and can enjoy high quality products and a few luxuries (OECD, 2011). Designer clothes and perfumes franchises together with luxury vehicle dealers enjoy a lucrative market in Spain. Hotel standard in Spain are also considerably high compared to the rest of the world.
The transport sector is well developed and highly efficient due the highly extensive rail system, which serves Madrid and other major cities. The country has 47 Airports with the airport of Madrid being the busiest and the fourth busiest in the EU. Transportation of goods and services is very quick and cost efficient. Spain is also keen in developing renewable energy. The country is the world’s leading producer of solar energy, a major producer of wind energy, hydroelectricity, and biomass. Industrial growth is fueled by the availability of cheap and reliable power. Green energy and products that use energy efficiently such as electric cars are very viable products in the Spanish market.
Rossano E., Llonch, A., M. and Pilar L. B., (2006). "Measures of marketing
performance: a comparative study from Spain", International Journal of
Contemporary Hospitality Management, 18 (2), pp.145 – 155
Enrique, B. A., (1996) "Tourism and marketing in Spain: Analysis of the situation and
future perspectives", Tourism Review, 51 (1), pp.34 – 40
Worldwide Governance Indicators (2011). Country Data Report for Spain, 1996-2010.
World Bank Institute
OECD (2012). Country Statistical Profile: Spain 2011-2012. Retrieved from
http://www.oecd-ilibrary.org/economics/country-statistical-profile-
spain_20752288-table-esp
OECD (2011). OECD Perspectives: Spain Policies for a sustainable recovery. Retrieved
from http://www.oecd.org/dataoecd/45/46/44686629.pdf
