Spain to lose 20% of its econ­omy if Cat­alo­nia splits

Financial Nigeria Magazine - - Finance - Co­coa pods

The Spanish re­gion of Cat­alo­nia held a con­tro­ver­sial in­de­pen­dence ref­er­en­dum on Oc­to­ber 1. Vot­ing went ahead although the Spanish high­est court had de­clared the ref­er­en­dum un­con­sti­tu­tional, and in spite of the dis­rup­tion to ac­tual bal­lot­ing by the Spanish po­lice.

Ac­cord­ing to CNN Money, Cat­alo­nia ac­counts for about 20% of Spain's econ­omy, and leads all re­gions in pro­duc­ing 25% of the coun­try's ex­ports. The re­gion con­trib­utes much more in taxes (21% of the coun­try's to­tal) than it gets back from the govern­ment.

In­de­pen­dence sup­port­ers have seized on the im­bal­ance, ar­gu­ing that stop­ping trans­fers to Madrid would turn Cat­alo­nia's bud­get deficit into a sur­plus.

Cat­alo­nia has a proven record of at­tract­ing in­vest­ment, with nearly a third of all for­eign com­pa­nies in Spain choos­ing the re­gional cap­i­tal of Barcelona as their base. Volk­swa­gen and Nis­san, for ex­am­ple, both have plants near Barcelona.

Both sides of the po­lit­i­cal di­vide face sig­nif­i­cant busi­ness and fi­nan­cial risks. An in­de­pen­dent Cat­alo­nia that drops out of the Euro­pean Union will see the costs of its im­ports and ex­ports go up. On the part of Spain, busi­ness con­fi­dence will likely plum­met and Cat­alo­nia might de­cline its share of the cur­rent pub­lic debt. was con­cen­trated in only a few coun­tries between 2014 and 2016. 73% of FDI to Africa went to 10 coun­tries.

The re­port warns that th­ese trends are un­fold­ing at the worst pos­si­ble time, given the need and op­por­tu­nity to har­ness Africa's 'de­mo­graphic div­i­dend.' The con­ti­nent's pop­u­la­tion is set to dou­ble by 2050. In­creased in­vest­ments from aid, pri­vate flows and do­mes­tic re­sources are re­quired to fi­nance the ed­u­ca­tion, em­ploy­ment and em­pow­er­ment of this grow­ing youth pop­u­la­tion. Ac­cord­ing to lead­ing econ­o­mists, Africa's youth is piv­otal to lift the least de­vel­oped coun­tries out of poverty, ac­cel­er­ate sus­tain­abil­ity and build long-term pros­per­ity.

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