The storm of the economic downturn in the euro area, the commercial tensions between the United States and China or Brexit leave its effects felt. According to the report, 48% of Spanish businessmen believe the economy will get worse in the next 12 months Perspectives Spain 2019, prepared by the consulting firm KPMG and the Spanish Confederation of Business Organizations (CEOE). In the previous edition, only one in 10 managers was distrust of the economy's development.
Nevertheless, entrepreneurs are positive about their future activities: 69% of them believe they will increase their revenue by 2019 compared to 77% of the previous edition. This optimism is reflected in several data: nearly four out of ten managers trust that they will be able to increase their employment and 40% expect to maintain their workforce. Although 21% believe that adjustments will have to be made to 17% of the previous report.
The challenges seen on the international scene and which can reduce the activities of companies, both Spanish and foreign, are more. The OECD has just cut the growth outlook for the euro area from 1.8% to 1%, and the ECB lowered it from 1.7% to 1.1%. To this downturn is added the political uncertainty in Italy, Brexit, the slowdown in Chinese investment or the slower growth in Germany.
In this context orOf every 10 traders who participated in the survey – made from more than 1,000 studies – they point out that political uncertainty will be the biggest threat to the Spanish economy in 2019, a similar percentage as the previous survey followed by the slowdown in the euro area. (one 48%). 37% mentions the regulatory environment and 33% mentions geopolitical tensions.
Among the risks of a business nature is the one that creates the greatest uncertainty, the legislative, for 69% of the managers. This list also includes climatic and environmental risks, causing concern for 14% of the interviewers. Regarding the internal situation, 67% of senior executives say that the impact of the political situation on their business activity in 2018 has been negative – from 53% of the previous issue – especially in investment and recruitment decisions . The government calls for more administrative simplification, education and training focusing on skills development and innovation promotion.
The technology companies' leaders are the most positive about the future of the economy and the turnover of their business, while those working in the sectors most affected by the economic downturn and the digitization impact of the automotive industry are the least optimistic. Several car companies like Ford have already announced reductions in employees, and others like Volkswagen have warned about job cuts that will lead to the transition to the electric car.
The prospects are also good in terms of investment. One in two entrepreneurs is planning to increase them, and 37% are keeping them at the same level. The focus is on digital transformation and improvement of processes, which together with the need to develop new products and services are among the strategic priorities of the respondents. 66% of them say their primary investment efforts will be towards technology tools, especially advanced data analysis systems and cloud services.
"Leaders are cautious about economic development in the face of deceleration forecasts and geopolitical uncertainties, while maintaining investment in technology to speed up their digital transformation processes," summarizes Hilario Albarracín, president of KPMG in Spain.
90% of Spanish businessmen surveyed also say that the digital transformation of their business has already begun, and more than half of them say the results are positive. The aspects that have benefited most from technological improvements have been the relationship with customers, cost reduction and production processes.
Half of the managers surveyed in the report Perspectives España 2019 by KPMG and CEOE confirms to maintain trade relations with the United Kingdom. Among the main negative effects of leaving the EU countries, Spanish businessmen speculate that the British economy and legislative changes are declining, but also the depreciation of the pound or the limitation of the free movement of people who may affect the recruitment of talent or the tourist flow , one of Spain's leading sectors.