Speech by President of the Government at inauguration of the Spain-Brazil Business Meeting

Sao Paulo

Mr Minister for Foreign Affairs; Mr Minister for Industry, Foreign Trade and Services; Secretaries and Deputy Secretaries of the State of Sao Paulo and of the rest of the Brazilian Government; ambassadors; State Secretary for Trade; ladies and gentlemen, dear friends,

For me it is a great pleasure to inaugurate and take part in the inauguration of this Business Meeting between Spain and Brazil; a meeting which, I am absolutely convinced, will be highly beneficial to both countries. Spain and Brazil are, as you know, partners and friends, and maintain strong institutional, cultural, economic and business ties.

I wish to start by thanking all those bodies and institutions from the two countries that have made this meeting possible through their hard work.

Nowadays, the geopolitical and economic panorama of the region cannot be understood without Brazil and, moreover, at a global level, Brazil has established its position as one of the great emerging powers, which has an increasingly competitive industrial and high-tech sector. It is true that, as happened with us, Brazil is having to tackle a tough economic situation, but it is a country with a tremendous capacity for recovery. That is why, similarly to on other occasions, Brazil will not only overcome these challenges, but its economy will come out of this, and indeed is coming out of this, even stronger.

To that, end, I urge the Government of Brazil to press on with its economic reforms. I think, in all honesty, that things are being done well and, because I actually believe that things are being done well, I wish to state this.

Reforms are always necessary and they are necessary for ensuring that the economy is increasingly more competitive and to generate well-being, create wealth and employment, which is the ultimate goal.

And I can say that reforms are always necessary because I have gone through this. Spain also had to tackle a crisis situation, an unprecedented crisis in our history. Thanks to the ambitious reformist agenda we implemented in 2012, with the adoption of measures that were not always easy, we managed to turn the situation around. Spain is now growing and creating jobs, and it is doing this with a growth model that is more balanced and sustained, in which the foreign trade sector and our competitiveness are playing a key role.

In 2016, last year, the Spanish economy grew by 3.2%, and headed up, for the second year in a row, the growth rate of the major economies in the Eurozone; and in 2017, we will continue to grow by at least 2.7%. You can be totally and utterly sure that this was unimaginable just four years ago. Moreover, this growth has translated into intense job creation of around half a million new jobs each year since 2014.

This radical change has been possible thanks to actions at different levels. In order not to bore you, I will mention just four of these:

- First, an effort to guarantee the sustainability of the public accounts, which has led us to reduce our public deficit by more than half since 2011, and thus regain confidence in the Spanish economy.

- Second, the clean-up of the financial sector, which allowed credit to flow once again and reduce financial costs considerably.

- Third, the labour reform, which was a priority and fundamental, allowing the foundations to be laid for strong job creation.

- Lastly, I will mention the energy reform to guarantee the sustainability of the sector and reduce energy costs which, as you know, are a key element of competitiveness.

So, all these reforms have been crucial for boosting the contribution of the foreign trade sector to our growth. As always happens when you undertake reforms, there are people who oppose them, but when you are certain that you are doing what needs to be done, you must do this, which is why I have to praise the determination and courage with which the Government of Brazil is acting. This has all led to our companies becoming more competitive and to our products becoming more attractive abroad.

This can also be seen through the figures on Spain. Before the crisis we were exporting a quarter of the Gross Domestic Product of the country; we are now exporting more than a third of the Gross Domestic Product. This figure is higher than the weighting of exports in the GDP of countries such as Italy, France and the United Kingdom, which are our traditional competitors.

Furthermore, the dynamic nature of exports has led to a positive foreign trade balance over the last five years, unprecedented in the economic history of our country. In other words, unlike what occurred in other periods, the Spanish economy is growing without becoming indebted. In short, the economy is growing because it is producing and exporting.

As one would expect, the transformation of the business fabric and culture has been key throughout this process. Spanish companies are increasingly aware of the opportunities offered by the foreign trade sector in an increasingly global and competitive world and they have incorporated this into their business strategy: they are exploring new markets, specialising in products and technologies and creating synergies. And this is not only being done by large companies, as in the past, but increasingly by small- and medium-sized enterprises.

For that reason, since the start of the crisis, Spanish exports have grown by 50% and there are now almost 50,000 companies regularly exporting beyond our borders, and, against this backdrop, Brazil is a priority country.

The fact that some of the most important Spanish and Brazilian companies are gathered here today is evidence of the good bilateral relations between our two countries. Brazil is and will remain a priority partner for Spain, it is already the second largest trading partner in the region and the third largest recipient of Spanish investment in the world. I firmly believe that there is still room to step up our economic and trade relations in the coming years.

There are certain sectors that offer major opportunities: infrastructures, telecommunications, energy, the automotive industry and air traffic; opportunities that are reflected in major Brazilian investment programmes, such as the CRESCER Project and the 'Innovar Auto' Programme.

And furthermore, I would like to state that Spanish investment in Brazil remains stable. Spanish companies have maintained their commitment to and interest in the new trade and investment opportunities here. Spain is the third largest investor in Brazil, but if we take into account real investments, it is the second largest investor, behind only the United States. This is important because Spanish investments here create jobs: more than 165,000 jobs, according to the latest figures available for 2014.

In summary, exports and investment are always a source of economic growth and job creation and, in ultimately, of well-being. That is Spain's experience. That is why it is important to do whatever is possible, as Brazil is doing, to tear down those obstacles that still exist to exports and investment.

On another note, Spain is also an attractive location for Brazilian companies and investments, since it offers good investment opportunities in an open and competitive environment. In addition to a market with more than 46 million people, Spain offers favourable access to third markets, thanks to its membership of the European Union, its advanced infrastructure networks, its geographic situation and its macro-economic stability.

Ladies and gentlemen,

I don't want to end my speech without mentioning an issue that you heard me refer to on several occasions this morning: I am talking about the free trade agreement between the European Union and the MERCOSUR countries. I believe that this agreement is now closer than ever and I also hence believe that we must speed up negotiations to ensure a political agreement is reached during this year - 2017.

Spain is doing everything possible to facilitate this through the European Union and this agreement is good for two reasons, if only for these two reasons: on the one hand, it will improve the life of citizens from both trading blocs by creating a market of 700 million consumers and facilitating relations between our companies; and secondly, it will allow a positive message to be sent out to the international community on the benefits of this market and of opening up to foreign trade. Broad, balanced and mutually beneficial trade agreements are the best instrument for guaranteeing growth and global prosperity.

I will end now. As I have said, Spain is committed to Brazil. This is a good opportunity for me here, in Sao Paulo, to see firsthand the experiences and reflections of Spanish and Brazilian companies. I hope that this meeting and the growing communication between the two communities of business leaders will lead to future joint projects, thus responding to the opportunities offered to us. For my part, my government and the Spanish public authorities are clearly committed to extending economic and trade relations between Spain and Brazil.

Lastly, I would like to end this speech by expressing my gratitude for the treatment, affection and warmth shown to us by the Government of Brazil and the different representatives of civil society. I am convinced, as President Temer said yesterday, that this meeting, these meetings, we have held over the course of these last two days, will be very important for the future of our two countries. Of course, for me, for the Government of Spain, and I believe that for many Spanish business leaders here in Brazil, this will be a priority.

I wish you every success and we are sure that you will achieve this because, among other things, you have to look for luck in life and those who take decisions and work seriously, will always find it.

Thank you very much.