Post-Pandemic Investment in Spain: Assessing the Sluggish Recovery
Selected Issues Papers, June 13, 2025
Source details
- Canonical URL
- Post-Pandemic Investment in Spain: Assessing the Sluggish Recovery
Other formats
Bibliographic details
- Authors: Nina Biljanovska
- Published: June 13, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229013222.018
Executive summary and main findings
- Paper examines Spain’s investment performance five years after the COVID-19 pandemic.
- As of 2024, investment had only returned to pre-pandemic levels and remained below historical fundamentals and euro area peers, particularly in:
- transport equipment
- other construction
- Macroeconomic analysis identifies elevated economic policy uncertainty as a factor holding back investment.
- Firm-level data findings:
- Investment among small and younger to middle-aged Spanish firms is less responsive to profitability than in comparable firms in larger euro area economies.
- For younger and middle-aged firms, high leverage during the pandemic points to binding financial constraints.
- Overall analytical conclusion: uncertainty appears to be weighing on investment decisions in Spain, with firm heterogeneity and pandemic-era leverage amplifying constraints for certain cohorts.
Analytical components and evidence
- Timeframe: five years after the COVID-19 pandemic; status assessed as of 2024.
- Comparative dimension:
- Spain vs. historical fundamentals.
- Spain vs. euro area peers, with underperformance concentrated in specific sectors (transport equipment; other construction).
- Macro-to-micro linkage:
- Elevated economic policy uncertainty (macro) correlated with subdued aggregate investment.
- Firm-level responsiveness (micro) shows weaker sensitivity of investment to profitability for small and younger to middle-aged firms, suggesting transmission of uncertainty to firm investment behavior.
- Financial constraint evidence:
- High leverage during the pandemic among younger and middle-aged firms indicates binding financial constraints limiting investment recovery.
Content in this bundle
- Box 1. Investment Component of the Recovery, Transformation and Resilience Plan