At the bottom point of the economic crisis in Spain, value added created by the non-financial corporate sector (NFCs) had fallen by more than 10% in 5 years, from EUR 605 bn in end-2008 to EUR 543 bn in end-2013, when it started to recover. It now has just reached the level previously reached in 2008 in nominal terms.
Over this whole period of time, the improvement in profit margins was very large. Contrary to what happened in most euro area member states, margins started to improve at the beginning of the crisis, probably due to the freefall of activity in the construction sector, where labor is intensive and margins are low. It went on afterwards, in line with labor costs adjustments and competitiveness improvement in the whole economy. Whereas it was substantially below euro area average previous to the crisis (36.6% against 41.6% in euro area in 2006), the average profit margin ratio in the Spanish non-financial corporate sector is currently among the highest in the zone, at 43.2% in early 2017.
by Frédérique CERISIER