{
  "title": "Spain: Selected Issues",
  "publication": "IMF Staff Country Reports, June 6, 2025",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2025/06/04/spain-selected-issues-567434",
  "canonical": "https://www.imf.org/en/publications/cr/issues/2025/06/04/spain-selected-issues-567434",
  "overlayPath": "/en/publications/cr/issues/2025/06/04/spain-selected-issues-567434/index.md",
  "summary": "This Selected Issues paper assesses the sluggish recovery and post-pandemic investment in Spain. The investment recovery has been weak across all components, but particularly so in transport equipment and other construction.",
  "sections": [
    {
      "heading": "Summary of main findings",
      "content": "- The paper assesses the sluggish recovery and post-pandemic investment in Spain.\n- The investment recovery has been weak across all components, with particular weakness in transport equipment and other construction.\n- Investment has been lagging euro area peers and has remained below levels implied by its historical drivers, narrowing the gap with these fundamentals only in recent quarters.\n- Elevated economic policy uncertainty is identified as a drag on investment.\n- Firm-level data indicate a weaker investment response to profitability among:\n  - small firms, which make up a large share of the Spanish economy; and\n  - younger to middle-aged firms, which are key drivers of growth.\n- The weaker investment response hints at a potential role of uncertainty or other factors reducing firms’ willingness to invest, even when financial capacity is available.\n- For younger and middle-aged firms specifically, financial constraints during the pandemic—captured by high leverage—are found to have been a constraint."
    },
    {
      "heading": "Analysis and interpretation",
      "content": "- The shortfall in investment relative to historical determinants has only narrowed recently, implying a persistent gap that is not yet fully explained by standard fundamentals.\n- Heterogeneity across firm size and firm age is important: small firms and younger/middle-aged firms show attenuated investment responses to profitability compared to other large euro area economies.\n- Elevated domestic policy uncertainty emerges as a broad macro factor that has negatively affected investment decisions.\n- Financial constraints (high leverage) played a specific role for younger and middle-aged firms during the pandemic, suggesting that access to financing remains a channel through which investment has been held back."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Reduce domestic policy uncertainty to help restore firms’ willingness to invest.\n- Improve financing conditions for constrained firms, with a focus on younger and middle-aged firms facing high leverage.\n- Address structural barriers to investment to unlock a more sustained and broad-based investment recovery.\n\n---\n\n Content in this bundle\n\n- Spain: Selected Issues; IMF Country Report No. 25/122; May 16, 2025\n  - Spain: Selected Issues; IMF Country Report No. 25/122; May 16, 2025 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Spain: Selected Issues; IMF Country Report No. 25/122; May 16, 2025 (PDF){rel=\"external\" type=\"application/pdf\"}"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/cr/issues/2025/06/04/spain-selected-issues-567434/index.md)",
    "[Structured JSON version](/en/publications/cr/issues/2025/06/04/spain-selected-issues-567434/index.json)",
    "[Bundle manifest](/en/publications/cr/issues/2025/06/04/spain-selected-issues-567434/bundle-manifest.json)",
    "Published: June 6, 2025",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798229012645.002",
    "The paper assesses the sluggish recovery and post-pandemic investment in Spain.",
    "The investment recovery has been weak across all components, with particular weakness in transport equipment and other construction.",
    "Investment has been lagging euro area peers and has remained below levels implied by its historical drivers, narrowing the gap with these fundamentals only in recent quarters.",
    "Elevated economic policy uncertainty is identified as a drag on investment.",
    "Firm-level data indicate a weaker investment response to profitability among:",
    "The weaker investment response hints at a potential role of uncertainty or other factors reducing firms’ willingness to invest, even when financial capacity is available.",
    "For younger and middle-aged firms specifically, financial constraints during the pandemic—captured by high leverage—are found to have been a constraint.",
    "The shortfall in investment relative to historical determinants has only narrowed recently, implying a persistent gap that is not yet fully explained by standard fundamentals.",
    "Heterogeneity across firm size and firm age is important: small firms and younger/middle-aged firms show attenuated investment responses to profitability compared to other large euro area economies.",
    "Elevated domestic policy uncertainty emerges as a broad macro factor that has negatively affected investment decisions.",
    "Financial constraints (high leverage) played a specific role for younger and middle-aged firms during the pandemic, suggesting that access to financing remains a channel through which investment has been held back.",
    "Reduce domestic policy uncertainty to help restore firms’ willingness to invest.",
    "Improve financing conditions for constrained firms, with a focus on younger and middle-aged firms facing high leverage.",
    "Address structural barriers to investment to unlock a more sustained and broad-based investment recovery.",
    "**Spain: Selected Issues; IMF Country Report No. 25/122; May 16, 2025**"
  ],
  "related": [
    {
      "title": "Spain: Selected Issues; IMF Country Report No. 25/122; May 16, 2025",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/cr/2025/english/1espea2025002-print-pdf.pdf",
      "summary": {
        "path": "/-/media/files/publications/cr/2025/english/1espea2025002-print-pdf.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/cr/2025/english/1espea2025002-print-pdf.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/cr/issues/2025/06/04/spain-selected-issues-567434/index.md",
    "json": "/en/publications/cr/issues/2025/06/04/spain-selected-issues-567434/index.json",
    "bundleManifest": "/en/publications/cr/issues/2025/06/04/spain-selected-issues-567434/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-11T08:09:59.038Z"
}