Selected Issues Papers

Post-Pandemic Investment in Spain: Assessing the Sluggish Recovery

By Nina Biljanovska

June 13, 2025

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Format: Chicago

Nina Biljanovska. "Post-Pandemic Investment in Spain: Assessing the Sluggish Recovery", Selected Issues Papers 2025, 076 (2025), accessed June 14, 2025, https://doi.org/10.5089/9798229013222.018

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Summary

This paper examines Spain’s investment performance five years after the COVID-19 pandemic. As of 2024, investment had only returned to pre-pandemic levels and remained below historical fundamentals and euro area peers, particularly in transport equipment and other construction. Macroeconomic analysis identifies elevated economic policy uncertainty as a factor holding back investment. Moreover, firm-level data show that investment among small and younger to middle-aged Spanish firms is less responsive to profitability than in comparable firms in larger euro area economies, further suggesting that uncertainty is weighing on investment decisions. For younger and middle-aged firms, high leverage during the pandemic also points to binding financial constraints.

Subject: Capital formation, COVID-19, Depreciation, Financial institutions, Foreign exchange, Gross fixed investment, Health, Housing, Intangible capital, National accounts, Purchasing power parity, Sovereign bonds

Keywords: Bond yields, Capital formation, Consumer price indexes, COVID-19, Depreciation, Economic policy uncertainty, Firm heterogeneity, Gross fixed investment, Housing, Intangible capital, Investment, Leverage, Profitability, Purchasing power parity, Sovereign bonds

Publication Details

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