Spain; sales potential is excellent for American high-tech

SPAIN

Sales Potential Is Excellent For American High-Tech

Although total U.S. shipments to Spain fell 7.3 percent in 1984 to $2.5 billion, they could revive significantly if the Spanish government is successful in achieving its 1985 goal of increasing domestic investment by 5.5 percent. The government is making available a variety of financial investment incentives, plans to adjust its monetary policies, and hopes to pass revisions to Spain's labor legislation in order to improve the domestic business environment.

U.S. exports 1984--$2,561.4 million

U.S. imports 1984--$2,627.2 million

One of Spain's major investment promotion efforts, the 1984 National Plan for Electronics and Informatics, attracted over $200 million of new foreign capital during its first year to Spain's emerging electronics industry. This program alone could stimulate orders over the next four years for U.S. suppliers for over $1 billion worth of support equipment and electronic components.

The Spanish government is targeting GDP growth of 3 percent for 1985. Unlike last year's 2.5 percent growth, mostly generated by an 18.5 percent increase in exports to the world, it hopes to base this year's expansion primarily on growth in domestic consumption. Last year domestic demand was limited by a 1 percent decrease in total investments, despite the fact that foreign investment in Spain increased by $2.8 billion (65 percent) for the year. The United States has the leading share of inplace foreign investment, at 23 percent.

The target for price increase in 1985 has been set at 7 percent, continuing the decline from a 12 percent rate in 1983. Spain's payments on current account improved remarkably during 1984, rising from a $3.5 billion deficit to a surplus of $1.1 billion. A positive ledger is also expected in 1985. Foreign exchange holdings increased over 40 percent during 1984, reaching a total of $16 billion. Because the government continues to eliminate inefficient state-owned firms, unemployment in 1985 will probably not decline significantly from its present 20.7 percent level.

EC accession negotiations continue for a Jan. 1, 1986 entry, with agricultural and fishing issues left to be resolved. Spanish entry to the EC has been the most significant factor in stimulating demand for U.S. products, as domestic firms must make significant progress in improving productivity and product quality in order to compete successfully within the EC. Nonetheless, U.S. firms face increased pricing pressure in Spain, a result of a 35 percent shift in value between the dollar and the peseta over the past two years.

Major opportunities have developed for U.S. suppliers of computers, peripherals and parts. This market could generate $370 million worth of U.S. sales by 1987. Electronic components needed by Spain's emerging electronics assembly and manufacturing industry may provide orders by 1987 for U.S. firms for $150 million annually. Increasing consumption of industrial process control instruments could yield a market for U.S. products worth $170 million in 1987. Opportunities also exist for the sale of medical equipment, and for such services as insurance, leasing, franchising, and health care.

The Commerce Department will sponsor a Health Care Equipment Seminar Mission to Madrid and Barcelona in September 1985, followed in November by an exhibition of computer products in SIMO, Spain's largest exhibit of these products. Also in November, a Food Processing and Packaging Machinery Trade Mission will stop in Barcelona. In December, a wine-making equipment seminar mission will visit the Spanish International Wine Show in Madrid.

For further information on this market, contact the Spain Desk, (202) 377-4509.

COPYRIGHT 1985 U.S. Government Printing Office
COPYRIGHT 2004 Gale Group