What Catalan independence could mean for Spain? - HSBC

Fabio Balboni, European economist at HSBC, explains that Catalonia accounts for about 15% of the Spanish population and 19% of the country's GDP.

Key Quotes

“Its GDP per capita is about 20% higher than the rest of Spain, and the recovery has been faster, with an unemployment rate of 13.2% in Q2 2017, 4ppt lower than in the rest of Spain, and housing prices already picking up sharply. Catalonia's economy is very open, accounting for over a quarter of Spanish exports. It also has an inter-regional trade surplus (ie with the other Spanish regions) of over 10% of its GDP, which means Spain might struggle to continue to generate current account surpluses – which are crucial given its large net external indebtedness (close to 100% of GDP) – if Catalonia broke away.”

“With a GDP of around EUR200bn, Catalonia is about the same economic size as Finland. Without it, Spain would be only slightly over half the size of Italy, in terms of GDP, and only about a third bigger than the Netherlands. Its fiscal deficit would also be much higher, and could increase to about 4% of GDP this year (from the government's expected outcome of 3.1%) and its debt to GDP increase to about 115%, from a little below 100% currently, despite Catalonia being the region with the highest debt (c.EUR77bn). And this, of course, without taking into consideration the wider implications in terms of the economy, in terms of consumer and investor confidence, which could undermine the Spanish recovery, as the Bank of Spain and the IMF have recently warned.”